The Motley Fool Discussion Boards

Previous Page

Financial Products & Services / Discount Brokers

URL:  http://boards.fool.com/i-disagree-reallyalldone-while-scottrade-wont-30508419.aspx

Subject:  Re: Scottrade DRiP to Become Reality Date:  1/26/2013  7:35 PM
Author:  Prospero13 Number:  50059 of 50177

I disagree, reallyalldone. While Scottrade won't make money from implementing DRIPs, they will retain and attract the customers who want that feature. That was the main reason I left them. Otherwise, I was perfectly happy with them.

Most people aren't going to receive enough dividends from their holdings to reinvest manually, so the money will just be sitting there earning little to nothing in interest. While it may seem minuscule, those reinvested dividends will compound over time. I think it's even more relevant to DRIP in tax-sheltered accounts like IRAs since you're limited to the amount of money you can contribute every year and you don't need to report the cost basis to the IRS. It only makes sense to keep your commissions as low as possible--preferably no more than 2% of the capital you're investing. Once your holdings are spitting out enough cash so you can do that 3 or 4 times a year, it makes more sense to stop the DRIPs and reinvest those dividends in more timely investments.
Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us