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I've suggested many times that beginner investors, or investing for kids, should consider using DRIP's. However, drip's cannot be used for TFSA or RRSP's here in Canada.
But one can still take advantage of using drip's to invest with small amounts, commission free purchasing of more shares, full dividend reinvestment and get the most from compounding.
Then when your drip becomes large enough you can transfer "In Kind" some of the shares into a tfsa or rrsp to get the tax advantage. This is especially good for kids, as they can't open an rrsp or tfsa till they are 18.
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The devil is in the details. I had a DRIP plan for my BNS investment - and amongst other things that that are frustrating with the DRIP plan (everytime I want to make a move, it took weeks to mail in the cheque and buy more shares....which is ridiculous in these times), the point that drove me to get rid of it was the fact that I could tax-shelter my investments, esp when I had plenty of room in my RRSP and TFSA accounts.
Even when I had decided to move "in kind", it wasnt easy. There are a lot of fees to consider, including my broker that would charge something close to $250 for depositing a share that is in certificate form. Eventually, consider all the problems, I decided to just sell my DRIP plans shares (which only had minimal capital gains) and moved the cash to my TFSA account.
So, to sum up - moving "in kind" seems like a simple step, but I recommend looking into details - both on the trasnfer agent's side and your broker's side on how hard and complicated it is.
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Not a good experience. With Computershare you can do a bank direct debit for many companies, including bns. Agree that one must check for any transfer fee, but find it had to believe a broker would charge $250 to have funds transferred in. I deal with ShareOwners and they don't charge for transfers in.
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Sorry little behind on this. Why aren't we able to drip in TFSA and RRSP? I dont have enough in any stock to drip yet but was planning to put most in a drip eventually.
I know i've seen synthetic drips in my brokerage so not sure why we wouldn't be allowed to drip the old fashioned way.
