| Dividend Re Investment Plans (DRIPs) |
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Are there really good investments for $25 "A dividend reinvestment program or dividend reinvestment plan (DRIP) is an equity investment option offered directly from the underlying company. The investor does not receive quarterly dividends directly as cash; instead, the investor's dividends are directly reinvested in the underlying equity. It should be noted that the investor still must pay tax annually on his or her dividend income, whether it is received or reinvested. This allows the investment return from dividends to be immediately invested for the purpose of price appreciation and compounding, without incurring brokerage fees or waiting to accumulate enough cash for a full share of stock. Some DRIPs are free of charge for participants while others do charge fees and/or proportional commissions." Dividend reinvestment plan From Wikipedia, the free encyclopedia http://en.wikipedia.org/wiki/Dividend_reinvestment_plan I first learned about DRIP's and allot of other stuff about securities from the National Association of Investors Corporation also know as "Better Investing" and you can visit them online through the Links heading on the Main Menu to your left under Tools. If you are green and looking to feel out the topic this would be a good place to start. A small membership fee gets you some literature through the year and they will also help you open accounts with individual companies who offer dividend reinvestment programs. The Better Investing organization offers a large network of community based investment groups that meet locally for educational classes or to maintain investment club portfolios. This is a great way to learn how to evaluate a company. If you’re a brave heart and are comfortable educating yourself online you can then hit the streets running (with membership fee savings in hand) and find companies in your field of vision who offer DRIP's. I currently have an account directly with my local bank. They only required I open a savings account and keep a $500 minimum balance or be feed to death (I keep the minimum balance). I then opened other accounts through a “stock transfer agent” with local companies that provide payroll services, utilities, or retail goods . I learned about these little helpful agents when my original Better Investing accounts went into service. I believe in cutting out the middle man and going to the horse’s mouth if it will save me some coin and transfer agents only charge a buck or two for each of my monthly purchases of stock. I like to put most of my investments in companies I can see from a personal perspective. When my local C-Store doesn’t accept Visa anymore I’ll be selling. I think street smarts gains you an advantage over the office cube crowd as long as you are willing to read the literature going in and read the homework assignment every quarter. Is it risky business? Any investment choice can be risky including the one I made in my brand of central heat and air systems I installed only 4 years ago when I was doing my 203K rehab and just did a $1,200.00 repair on. My lessons learned were to never do business with a family owned company again it just means they only hire stupid relatives and brands are only skin deep. Okay don’t get me started. My point is the school of hard knocks can rear its head in all areas of life and stocks are no different. Just remember the folks who walked away from the Big Crash of 08 with only 60% of their working investment capital probably ended up with 60% more than those who never saved a dime and may still have a chance to ride the eventaul up swing.
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