Beginner Investing » balanced portfolio http://beginnerinvestingguide.com Investing advice...for the rest of us. Sat, 05 Nov 2011 14:18:33 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 http://beginnerinvestingguide.com http://beginnerinvestingguide.com/wp-content/plugins/maxblogpress-favicon/icons/favicon-48.ico Beginner Investing Dividend Reinvestment Program http://beginnerinvestingguide.com/dividend-reinvestment-program/ http://beginnerinvestingguide.com/dividend-reinvestment-program/#comments Fri, 06 Nov 2009 21:35:08 +0000 joanne http://beginnerinvestingguide.com/?p=414 Investing in the stock market is a subject of intense curiosity for a huge percentage of wage earners. The images of the flurry of activity at stock exchanges, and the stories about day traders raking it in, are appealing for those who want to be able to provide a better lifestyle for themselves and their families into the future.
However the truth of it is that for the great majority of investors, any gains on the share market will have to be made by sensibly choosing a balanced portfolio and letting it grow over time. The good news is that there are plenty of relatively safe investment strategies that are very likely to offer a reasonable return on your money over a long enough period! One of the less well known options that is worth pursuing if you are interested in developing a long term strategy is a Dividend Reinvestment Program, or DRIP.

A DRIP is a program run in-house by a publicly listed company. They are often offered to employees of the company, but they are also open to external investors who can meet the companies minimum share threshold to participate – usually this threshold is quite low.

The benefit of DRIP investment is that you can start with a very low volume of shares, and gradually increase your shares over time. You usually set a fixed cash amount that you will use every month to buy more shares, and this can be set up to be automatically deducted from your bank account – in essence, it is a forced savings system. The strength of a DRIP lies in the fact that any dividends paid by the company on your shares are automatically reinvested, and this has a compounding effect on your number of shares over time. Many companies also offer shares to participants in the program at a reduced rate, and of course you pay no brokers fees if dealing directly with the company!

Although it might not suit day traders out for short term gain, a DRIP is a great tool to have in your arsenal when building a long term portfolio.

Search Related Tags: , , , , , , , , , , ,

Related posts

]]> http://beginnerinvestingguide.com/dividend-reinvestment-program/feed/ 13