Direct Investment/Drip Plans

[kayboy]

I've been thinking about buying some equities using Direct Investment and Dividend Reinvesting Plans.
Pros:
I can elect to have a certain amount automatically withdrawn from my bank account which forces me to make periodic investments.
It allows me to buy partial shares.
I can have all or partial dividends automatically reinvested.
Cons:
I have no control over cost of shares purchased.

Am I missing something?

O/T- I abhor Hallmark Holidays, but Happy Fathers' day to all.

[KenBob]

The biggest problem is that you lose control over the reinvestment.

I had a drip in UNP for about 6 months and it drove me nuts, including an irrational abhorance of fractional shares.

I much prefer to collect all my dividends from my portfolio and new money and invest the dividends in the particular stock that is the best value at the time.

[Roadmap2Retire]

You have no control over the shares purchased not only for dividend reinvestment, but especially true if theres a downturn and you want to move quickly to take advantage. The programs move at glacial speed. It takes days to instruct to buy more, when stock prices can change direction in a matter of seconds.

[cannew]

For those with limited funds or those who want to invest small amounts on a regular basis, WITH NO FEES, you cant beat drip's. With small amounts its not an issue of timing, its about getting those funds to buy shares and have those shares compound by buying fractions of shares and watching them grow.

If you try to accumulate small dividend amounts till you can buy what you want at the price you want, you will probably have to inject or have other money available.

[cannew]

(06-21-2015, 09:31 AM)Roadmap2Retire Wrote: You have no control over the shares purchased not only for dividend reinvestment, but especially true if theres a downturn and you want to move quickly to take advantage. The programs move at glacial speed. It takes days to instruct to buy more, when stock prices can change direction in a matter of seconds.

You may be correct when looking at short term price movements, but look back to the 2007-2009 financial crisis. Had you jumped in during 2007 and even 2008, you would have missed the real bottom of Mar 2009. The major drops may occur quickly, then rebound and often drop even lower. No one knows how low it will go before going up, so investing on a regular basis, regardless the price, works.

[Roadmap2Retire]

(06-21-2015, 01:31 PM)cannew Wrote:

(06-21-2015, 09:31 AM)Roadmap2Retire Wrote: You have no control over the shares purchased not only for dividend reinvestment, but especially true if theres a downturn and you want to move quickly to take advantage. The programs move at glacial speed. It takes days to instruct to buy more, when stock prices can change direction in a matter of seconds.

You may be correct when looking at short term price movements, but look back to the 2007-2009 financial crisis. Had you jumped in during 2007 and even 2008, you would have missed the real bottom of Mar 2009. The major drops may occur quickly, then rebound and often drop even lower. No one knows how low it will go before going up, so investing on a regular basis, regardless the price, works.

Yeah but with the slow moving speed, you are forced to follow the dollar cost average over a broader period of time. If a stock is dragged down because of an unrelated problem - I would want to add more shares to my position when I want to. With a DRIP program, its almost impossible to do so unless its a recession or the downturns lasts weeks/months. DRIP program provide no control (which I understand is good for most people to stop impulse buying and selling).

[kayboy]

(06-21-2015, 02:46 PM)Roadmap2Retire Wrote:

(06-21-2015, 01:31 PM)cannew Wrote:

(06-21-2015, 09:31 AM)Roadmap2Retire Wrote: You have no control over the shares purchased not only for dividend reinvestment, but especially true if theres a downturn and you want to move quickly to take advantage. The programs move at glacial speed. It takes days to instruct to buy more, when stock prices can change direction in a matter of seconds.

You may be correct when looking at short term price movements, but look back to the 2007-2009 financial crisis. Had you jumped in during 2007 and even 2008, you would have missed the real bottom of Mar 2009. The major drops may occur quickly, then rebound and often drop even lower. No one knows how low it will go before going up, so investing on a regular basis, regardless the price, works.

Yeah but with the slow moving speed, you are forced to follow the dollar cost average over a broader period of time. If a stock is dragged down because of an unrelated problem - I would want to add more shares to my position when I want to. With a DRIP program, its almost impossible to do so unless its a recession or the downturns lasts weeks/months. DRIP program provide no control (which I understand is good for most people to stop impulse buying and selling).

Thanks to all who chimed in. I don't disagree with anything that ya'll suggested. I guess it's sort of like a test. I plan on buying BMY with minimum amounts and increasing amounts every year. I guess maybe I just like to look and see what my money is doing while it's living somewhere else.

[rayray]

I had one DRIP Plan years ago through Exxon, going back about 20 years. It was great and served it's purpose, all the shares were cashed in when I purchased my first home.

That was before the Internet, online banking and everything else in regards to this great technology that we have at our disposal. Today? No, I wouldn't have a DRIP Plan since I like the way I'm able to invest in today's market using my available resources.

[DRILLINDK]

I research the DRIP plans myself and went into some details about them here:

http://dividendgrowthforum.com/showthread.php?tid=844


I determined it really isn't as great as they once were. I would look into Robinhood or Loyal3