Lessons Learned . . .

 Years ago when my father was still alive, he sold a rent house that he and his children owned together, he owned half and us kids owned the other half but he had control of the deal.  He got tired of dealing with it and so he sold it.

He took the money from the sale and bought three annuities of equal amounts ostensibly for the three of his children or in the case of my deceased brother, his children.  The annuities were earing about 8% or so and we were the assigned inheritors of the annuities.  He reached an age where he had to sell the annuities or annuitize them.  He chose to sell annuities and put the proceeds in our names with a brokerage account.

He asked me what I wanted to do with the money and I said, "Get a tax exempt bond fund."  He asked my sister and she did not have a clue as to what to do so he did for her what he did for me, bought into a Franklin Tax Exempt Mutual fund.  In the case of my brothers children, he simply distributed the money amongst the the four of them equally.

My sister kept the bond fund for awhile but could not tolerate the changes up and down of the fund.  It was not very volatile but it was enough to bother her.  So she sold it and took the cash,  I have no idea what she did with it but I suspect she put it into her house.  She was divorced, a single mother but her children were grown and had been well taken care of by their father.  She had become a school teacher and did not make a lot of money, so she used it to probably pay off her house, or at least pay the mortgage down.  She lived very frugally as she had little or no excess money.  I know that my father helped pay for her mortgage here and there over the years.

I took the monthly yield, usually about $100 or more in tax free interest from the Franklin Fund and put it into my T. Rowe Price New Horizons Fund.  It was a monthly pay out and I did that for several years until I moved to New Mexico and had to sell the Franklin Fund to buy a house in Ruidoso, NM.  I never thought much about the money that went into the New Horizons fund, I just let it ride and reinvested whatever the fund generated in income over the years.

About three years ago, that fund paid me just under $10,000 in capital gains.  I was astounded.  I had quit reinvesting in the fund when I moved from New Mexico to Texas in early 2002.  I had generally swept the proceeds into a money market fund for selective reinvesting.  Last year the fund paid me just over $10,000 in long term capital gains and almost $5,000 in short term capital gains.

The lesson learned is to let an investment grow.  The T. Rowe Price New Horizons fund has continued to grow and grow in value.  And it has continued to pay an outstanding capital gains annually.  Have patience and avoid rapid and early cashing out of a wind fall such as the one I got from my father.

I never got to really thank my father for the windfall, I regret that immensely.