NEW YORK (TheStreet) -- My wife recently had "the talk" with our daughter. She gave her the lite version of the birds and bees.It was only a matter of time. The questions kept on coming. We couldn't possibly have left her in the dark any longer. We do deserve part of the blame for this relatively early sex education. We let her watch a few episodes of "Friends." There's something odd -- not necessarily in a bad way -- about your daughter knowing how all of that works. I think she feels the same way, given that she requested my wife not tell anybody that she knows. She's embarrassed. And she vowed: I will never do that. My wife and I chuckled, realizing that part two of "the talk" -- explaining that people do that more because it feels good and less to procreate -- could be an even more uncomfortable parental rite of passage. But that's part of being a parent. Providing your kids with their rites of passage. Stepping out of your comfort zone. Letting loose. Letting go. I can see one of the ultimate rites of passage coming: puberty. It's on its way. Maybe I am just an investment geek's version of a freak, but I think it's fantastic that my daughter hit a key investment milestone -- one that too many investors overlook -- before she officially heads into the next stage of development. Over the weekend I logged into my daughter's custodial account. (You can read the background on that in My 8-Year Old's Portfolio Will Kick Your Portfolio's ...) On Monday, one of her three holdings -- Viacom ( VIAB) -- paid out my daughter's first dividend. It wasn't a huge windfall. But don't laugh. She collected and automatically reinvested $1.94, good for 0.0413 more shares of VIAB, bringing her total to 7.8193. Her portfolio is up 4.7% on strength in VIAB as well as Kraft ( KFT) and Madison Square Garden ( MSG). The MSG position has increased by more than 10%. A few thoughts on the process. First, we have had this account for a few months. While it's small in size, it has actually grown considerably since we opened it in April. My wife and I make all contributions to the account. I do not believe in investing as a vehicle to teach other life lessons.
In fact, if I hammered my daughter on having to put her "own" money into the account or needing to "work for it," the whole experience would likely produce unintended results. We did not set out on this journey to use investing to make other points or fulfill some disciplinary agenda. Instead, we teach, model and encourage participation in investing because we believe, in and of itself, it's the right thing to do. It's valuable knowledge and know-how too few kids get exposed to in high school, let alone elementary and middle school. Frankly, I want my daughter to be as set as is reasonably possible when she turns 18. If I ran the country, the government would fund a custodial account with $5,000 for every child born. You would receive your first account statement at the hospital. That would be cash well spent. That's not happening anytime soon and I hardly expect an 8-year old to set the course herself. As such, if financially able, I consider it a parent's responsibility to invest for their kids. It has only been a few months, but already I have seen several light bulbs go off in my daughter's head. The other day we drove by one of Viacom's buildings. That made her smile. She associated the property with the city she lives in and it became cool to be a shareholder for reasons that extend beyond SpongeBob and iCarly. Again, not a big deal, but these experiences -- combined with every time she looks over my shoulder to check a quote or see her account balance -- culminate into something instructional, useful and meaningful. I'm convinced of it. The same goes for the dividend reinvestment. When I show it to her, I am guessing my daughter will respond like many full-grown investors would. Yeah, big deal, $1.94, 0.0413 shares, you call that progress, Dad? I'll do my best to not even react. I'll just keep showing her the dividends each time they roll in. We learn plenty of lessons as investors, but after the recognition that very little, if anything, beats dollar cost averaging and dividend reinvestment, the most important lesson might be patience. Patience with relation to the early days of dividend reinvestment.
KFT and VIAB are the two companies in the portfolio that pay a dividend. The first 10 to 15 payments, admittedly, are pretty boring. But, how many investors allow this boredom to shake them out of a mundane and methodical investment strategy in favor of something that moves faster and is "exciting?" When I was younger, I did. In fact, in an article I wrote earlier this year over at Seeking Alpha, I detailed my bonehead decision to sell the 59 shares of McDonald's ( MCD) I had accumulated between 1998 and 1999 in the company's Dividend Reinvestment Plan (DRIP). Had I stayed the course, I estimated that, by the end of 2011, I would have had about 555 shares of MCD, worth (at the time) an estimated $55,683. That's a gain of more than 2,100%. To think that my daughter could be sitting on that much money or more come 2022 or so is not unrealistic. In fact, it's well within the realm of possibility. I wish I had that type of head start at age 18. But even more so, I would have liked the head start along with the right attitude. Here's hoping enough light bulbs go off in my daughter's head over the course of the next ten years that she does the "right" thing with the money -- whatever that might be -- when she turns 18. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. Follow @RoccoPendola