Re: Are DRIPs worth it?

From: "Ken Meinken" <kmeinken@bigfoot.com>
Subject: Re: Are DRIPs worth it?
Date: Sun, 30 Aug 1998 01:17:22 -4

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> From: Ira Krakow <krakowi@tiac.net>
> Subject: Are DRIPs worth it?
> 
> With the dramatic decrease in trading commissions (Brown and Company charges
> $5 for a market order, a number of other charge less than $10, even
> Schwab.com at $29.95 isn't too bad), why bother with DRIPs?
> 
> If you have an online brokerage account, you get instant liquidity, you can
> in many cases reinvest dividends, and you don't have as much paperwork as
> with DRIPs.  I'm starting to believe that DRIPs aren't really worth it any more.
> 
> Comments?


Ira,

to a degree, I've also come to the same conclusion.  If you are going 
to put a significant chunk of money against a stock (say enough to 
buy 10 or 20 shares), you might come out ahead by buying at the right 
time (buying a stock that fluctuates a lot at a better price ).  It 
also allows you to sell at a precise time and/or price.

However, I think DRIPs have some definite advantages:
- - a better approach if you want to routinely invest a small amount 
(e.g. $25 each month).  That schedule/discipline can help some people
- - helps to avoid panic decisions to sell

One definite negative to DRIPS is if people look for DRIP stocks for 
investment ideas (limiting their universe to only DRIP stocks.)

Ken



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