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Thursday, April 06, 2006

Auto investment

One thing I learned once I had a hand in investing in the stock market for the first time was auto-investments.

Auto-investment, or Direct Deposit, is having your investment in a stock come automatically from a bank account, such as a savings account. You fill out a form acquired from the holder or manager of your stock account, and they will regularly automatically deduct the amount you specify from your savings or checking account and directly deposit said amount into your stock account towards the purchase of shares of stock in that company. Presumably, if you regularly invest a fixed amount towards the purchase of stock, you can take advantage of something called "dollar cost averaging." In other words, when the stock cost is low, your regular deposit is buying more shares than when the cost is high, at which time you're purchasing a lesser number of shares.

Anyway, at first, I thought they held the balance until such time as it would have reached a sufficient amount to purchase one share. For example, if Sears were going for $50 per share, and you were depositing $25 per month, they would hold your $25 until the second month, and then credit you with one share.

Well, that's not how it works. In fact, if Sears were going for $50 per share, and your monthly auto-deduction were twenty-five bucks, you would be credited as having purchased .5 shares the first time a deduction was applied to your account. More likely, the figure would be accurate to the thousandths of a share, like 0.500 shares. Accountants like to deal with tiny fractions. Like that would matter to a first time investor.

Anyway, for me it was quite a hassle to start up Direct Deposit. It's not like Sears did not want my money. Far from it. The problem was trying to get the Direct Deposit account properly set up. For whatever reason, in the Direct Deposit world, your savings account number is not the seven or so digits you write on the back of your check from Aunt Bessie for your birthday, nor what you write on the deposit slip at the bank.

No. Instead it's some brazillian-digit number that's BASED on your seven digit account number that the stock manager needs. You also need something called a "bank routing number," another number that takes longer to write out than to say.

After about the third attempt to sign up for Direct Deposit for Sears, I decided to call my bank directly and ask for the proper numbers.

"Wachovia Bank of Charlotte, formerly Union Bank of Delaware, formerly Merchant's Bank of South Carolina, how may I help?"

"Yes, I am trying to set up Direct Deposit for a stock account and I need my routing number and my account number please?"

"May I have your account number please?"

"Sure, it's four two four, one nine six."

"Four two four, one nine six?"

"That is correct."

"OK, for Direct Deposit, you need to add the following to the front of the number. Have you got a pen?"

First of all, this teller obviously has WAAAAY too much faith in my abilities to write down numbers without making mistakes. I grab a pencil.

"Yes, I have a pen. Go ahead," I said.

"Zero zero zero, zero zero zero, zero zero two."

"Let me repeat that," I beg, "Zero zero zero, zero zero zero, zero two."

"No, it's zero zero zero, zero zero zero, zero ZERO two."

"Zero zero zero, zero zero zero, zero two," I attempt again.

"No. It's ..." she begins, "Hold on." I can hear her counting in the background. "OK. It's eight zeroes and then a two.

"Ahhh!" I exclaim. "Now I've got it. So it's eight zeroes, followed by a two, followed by my account number. Is that right?"

"Yes, but you also have to add digits AFTER your account number."

Oh, brother. I was beginning to wonder whether it was worth it at this point. Sears stock might have plummeted $6 by the time I got this right.

"OK," I sighed, "lay it on me."

"You have to add zero one to the end."

That's it? I asked myself.

"That's it?" I asked her.

"That's it. So altogether, the number you need to tell them is zero zero zero, zero zero zero, zero zero two, four two four, one nine six, zero one."

"Got it," I presumed. "Is that all I need?"

"No," she proceeded, "you also need the bank routing number."

"How long is THAT?" I cringed.

"That's only nine digits!" she laughed. I honestly think bank tellers get a charge out of rattling off numbers over the phone. "Pen ready?" she patronized.

"Pen ready," I fibbed.

"Two seven six ... (pause) ... three one four ... (pause) ... five nine six."

I could tell she added these pauses intentionally to mock my short term memory issues.

"OK, I think I got it. 276-314-596. Right?"

"Yay!" she said. Now it was clear she was basking in superiority.

"Thanks," I began, "Now all I gotta do is get all this to the stock manager before they close at five o'clock." It was 10:30 in the morning. Silence greeted me at the other end. "Hello?" I queried.

"I'm sorry, I was typing something." Sure. "Is there anything else I can help you with today?"

No, I thought, you have done more than your share of making me feel totally incompetent, thank you.

"No," I began, "you have been more than helpful," was what came out instead. "Thank you."

"Thank YOU for calling Wachovia Bank of Charlotte, formerly Union Bank of Delaware ..."

The rest just kind of dropped off the radar.

"Bottom line, once I got the proper digits loaded up on the stock manager's tabulator card, (carefully printing the digits in the microscopic boxes, and then darkening the proper circles in rows beneath each digit,) and had sent it off, I was on my way to take full advantage of "dollar cost averaging."

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