Wednesday, February 14, 1996
Foolishness on a Budget
or
A Working Class Fool is Something To Be
by GRunkle

While I can't really complain about my salary, I'm definitely not in the class of people depicted in brokerage commercials on CNBC. Like most people, I can't afford a yacht, horses, or a country club membership. And sometimes it's a struggle to get from paycheck to paycheck. Yet, I still invest quite a bit of money (as a percentage of my salary, anyway) in stocks. How does a budget-minded Fool do such a thing?

Unlike the rich, the budget-minded Fool relies on ingenuity to free up cash to invest. This isn't as hard as you might think, since average people spend a lot for things they don't need---like new cars. Sure, transportation's a must, but a new set of wheels every few years isn't. Alternative? A Foolmobile! A Foolmobile is an older car, preferably paid for, and reliable. Mine has 204,000 miles, but this is probably extreme. A good used 30,000 mile Foolmobile, from a fleet auction or a dealership, should be thrifty enough. Other toys you might live without are fancy stereos, multiple VCR's, camcorders (believe me, nobody, not even you, wants to watch your home videos), and Elvis paintings on black velvet.

Next, change your mindset. Don't think of the money you invest as saving- -think of it as spending, which is much more fun. And the fun continues as the companies you buy become, for you, fascinating stories. Some, like Morrison Knudson, turn out to be soap operas. Others, like Iomega, are David and Goliath sequels. In any case, consider yourself a modern day capitalist and rightfully think of these companies as "yours." So, while you may have to slave away at some drudge job during the day, you're still an entrepreneur and business owner in your "other life."

How do you actually invest? Many of the Wise will tell you to buy mutual funds. OK, you could do that, but most mutual funds under-perform the S&P 500 over time. Plus, they're only a little more exciting than CD's, which in turn are only a tad bit more interesting than watching paint dry. Forget it! I like DRiP's [see "DRiPs: Investing For The Foolish Proletariat" in the 1/22/96 Fribble]. The best ones are from companies such as Exxon, Proctor & Gamble, and Texaco. You can buy stock directly from these folks, and bypass that 25 year old broker with the superior attitude and the irritating habit of charging commissions. Plus, automatic DRIP investments are great for those of us not disciplined enough to set aside money (you know who you are!) These plans take a regular withdrawal right from your checking account before you even see it. (Don't worry, Texaco won't sneakily clean you out. You probably don't have enough money to interest them anyway.)

Finally, Working Class Fool that you are, you must do your own research. Visit your broker or a public library, and get your hands on references from Value Line, Standard & Poor's, or even corporate histories. Before I bought Coca Cola, I read a whole book on the company's fascinating past- -did you know that Coke originally had cocaine in the syrup, and was a medicine? Yep, the Real Thing. :-) Finally, an online service like AOL has a lot of good sources, such as Hoovers, Company Research, First Call Earnings Estimates, and of course, the Good Ole Fool.

Once you've done all this, your life takes on a whole new dimension. You're no longer just a working class fool. You are now Truly Foolish, and an actual owner of the businesses that propel our economy. Your life will be perfect, you will be happy, and your teeth will be whiter. Well, maybe not, but you'll be a Fool and that's good enough.