Dividend Reinvestment Plan [DRIP]
Dividend Reinvestment Plan’s, also called Drip investing, is very easy to set up and rewarding in the long run.
Companies issue dividends quarterly, basically bonuses to shareholders. With the dividends that you get you can usually either take the cash or you can buy more shares of the stock with the dividends. DRIP investing is simply taking the second option.
Although not for everyone I think DRIP investing is the best way for the average Joe to become wealthy via the stock market long term. It is not easy for professional’s to pick what stocks to buy, what stocks to sell, when to buy, when to sell, so it obviously will not be easy for the novice investor.
Instead of worrying about all of this, why not just buy solid companies that offer high dividend yields [3%+] and opt for dividend reinvesting? If everything goes as planned your money will compound very nicely over time. You might not get flashy 30% returns but you do not need 30% returns to become wealthy over time. Stay patient, stay logical and reasonable, and never sell shares of your company unless you have to. If you follow all of these guidelines your portfolio will be doing nicely 10, 20, and 50 years from now whether the stock market does well or not.