How buying Royal Bank stock taught this investor the value of patience

In My First Stock, we talk to Canadians about the first stock they owned and how the experience shaped how they invest today.

Shawn Matthews, semi-retired security analyst and do-it-yourself investor from Waterloo, Ont.

First stock: Royal Bank of Canada

My father opened a joint investment account with me in the 1990s, when I was in my mid-20s. I didn’t realize it then, but he was an active investor. He wanted to teach me about investing and decided to buy a conservative stock with a stable and growing dividend that would be around for a long time. A Canadian bank seemed like a good bet, and he chose Royal Bank because it was the biggest.

Not long after, he put it into a DRIP [dividend reinvestment pIan], which automatically uses the proceeds generated to purchase more shares of the company. That stock was 40 per cent of my net worth at one point.

What happened to the investment?

I took it out of the DRIP and, after a few years – once I took over my own investments – I decided to start selling a small percentage of the shares (about 10 per cent every two years) to diversify into other stocks. But I also wanted to make sure the value of my Royal Bank shares never dropped below a certain amount. Eventually, my net worth grew and Royal Bank became a more reasonable percentage of my portfolio.

I still own some of those Royal Bank shares today. I’ll never sell them outright because they were purchased for me by my father out of his own pocket. I have also owned Royal Bank stock on and off in some of my registered accounts. It represents about 4 per cent of my overall net worth today.

What did the experience teach you about investing?

Patience is the best virtue an investor can have. There can be huge benefits to compounding, earning dividends and reinvesting dividends. It pays off in the long run.

What’s your advice for someone buying their first stock?

My advice would be for others to do what my father did for me: Buy a conservative, dividend-paying stock and hang on to it. He also recently recommended to his granddaughter (my niece) that she buy Royal Bank stock with some of her savings. I also recommended she diversify a bit by adding some good technology stocks that she might find more interesting.

This interview has been edited and condensed.

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