After learning about what is a DRIP exactly you may be asking yourself, “Great, where do I sign up”. Sadly, real DRIPs can be a huge pain in the butt for three simple reasons.
Real DRIPs are not all bad, and do have some amazing up-sides (once you get past the hard parts above) including
In the investing world when you receive a dividend you have a few options for what to do with that money.
Unless you need the cash soon, then a very efficient thing to do is to re-invest it in more shares. But that costs money in trading fees and time as you have to setup the purchase.
In comes the concept of a DRIP. It’s a Dividend Reinvestment Plan where you as an investor can have your dividend payouts automatically be re-invested towards the purchase of additional stocks within that company.