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DRIP or dividend reinvestment program/plan, is a term not many are familiar with, although it’s been around since the 60’s. Many companies offer this program to their employees through stock options, that allow them to reinvest their cash dividends back into the company by purchasing a share or fractional shares of the company’s stock.
If you want to get into investing but are a little skeptical about the market, this is one of the best ways to begin. Start with companies you use, or are familiar with like your cell phone company, or hair care products. Get the company’s phone number from their website or prospectus and request to be transferred to their DRIP enrollment department. Once you purchase a stock in your name, you will be eligible to participate in the reinvestment program, it’s as simple as that. Then sit back and watch your earnings grow. 😀
It’s not a good idea to watch your stocks daily, because market fluctuations can cause a panic, but it’s recommended by investment analysts to buy and hold for a period of time, at least three to five years. What I suggest is to check on the progress of your investment monthly to see how it’s doing over the course of a year and then make a decision to keep it or sell. Once you sell, there is a portion that must be paid out in capital gains. Speak with your tax adviser about those details at tax time.
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Wishing you peace and prosperity,