Drip Investing - The Advantages of Investing in Drips
By Jeff C Daniels
If you are planning on making money by investing in some financial instruments, a good idea is to try practicing some drip investing. If it's the very first time that you are hearing about this type of investment practice, you should take note that these are viable financial investments that add ups to thousands of dollars in the long run. DRP or drip investing speaks to dividend reinvestment plan, which is concerned with investment opportunities that are offered by companies to their investors or shareholders.
Drips will allow shareholders to buy stocks or dividends directly from the company in small amounts through a transfer agent in a specified period of time like about a month or so. The objective is of drip investing is to allow shareholders to reinvest into a company's dividend so as to add more to their more to their earnings over a period of time, hence the dripping effect is achieved. In other words, purchasing small amounts of dividends each month will have a dripping effect on your profitability, but one thing is sure you will have sustained wealth for years to come. Let's look more closely at drip investing and what benefits it has for you the investor.
The Advantages of Drip Investing
One of the greatest benefits of drip investing is that it is extremely cost effective for you to buy stock dividends from a company and put it to much better use. When you've purchase shares of a company as opposed to putting your money in a money market account or spending it, you will have a much better chance to build, develop and strengthen your net worth. The cost effectiveness of drips is second to no other, additionally, drips allow your dividends to be reinvested at no fee whatsoever, and this means more profits and money in your pocket. However, if you went and invested in the stock market through a broker, you would be facing some very high commissions.
Great Discounts on Drips
Not only will you escape high stock broker commissions, but drip investing also gives you great discount on your drips. A number of companies that offer drip investing will allow shareholders to buy stock at good discounts in comparison to the current market price. Sometimes the discount will range anywhere between five and ten percent, giving you the opportunity to get immediate returns on your investment. However, you should note that not all companies offer these discounts and while some will offer these discounts on old shares, they won't offer discounts on new shares.
Helps To Realize Long-Term Goals
Another advantage of investing in drips is the fact that it forces you to purchase stock on a regular occasion, making you hold stocks for the long run. Also, investing in drips will train your mind to focus on long term goals and objectives. The truth is to gain extreme wealth and profitability from drip investing; you will need to be in it for the long run, mainly because the purchase of stock is extremely small, but is on a regular basis, that you will see the fruits and will enjoy the benefits in future years.