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This is my personal finance journal dedicated to investing, bank deals, money management, etc.  It is always best to start investing as soon as possible and by creating a website about it, it will help me stick to my goals while helping others along the way.  I am a recent college graduate in my mid 20s living in the northeast. 

 
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DRIPs PDF Print E-mail
Written by Administrator   
Saturday, 23 September 2006
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Investing small amounts of money over long periods of time in a solid company's stock has historically been an excellent way to create wealth. The slow accumulation of quality stocks and investments over long periods of time is the secret. But how do you become a millionaire when you only have a small amount to invest?  This is where DRIPs enter the picture.

DRIPs?  What are these funny sounding investment terms? They are Dividend Reinvestment Plans.

A great way for beginning investors who don't have a lot of money to invest.  You can even start an account with $50 and constantly add to it every month. You can choose to have your dividends constantly reinvested in the company at no additional cost thereby creating a snowball effect.  

DRIPs are usually offered directly through a company to give its shareholders an inexpensive way to invest in the company.  Normally the commissions are either free or very low compared to stockbrokers and it only requires you to hold one share to start investing through a DRIP plan.  To get that one share, you have to go through a broker to purchase it.  Afterwards, you are entitled to invest in the plan.

Another alternative to a DRIP is investing shares in Sharebuilder.  Sharebuilder is pretty much a DRIP for the whole stock market.  You can invest in stocks for as little as $4 at a time and have your paychecks directly deposit into Sharebuilder each pay period to ensure that you are paying yourself first.  
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