Kdub asked if he is better off investing in an IRAor a DRIP. Pixy replied that you should comparethe expected rate of return on the investment.I have to disagree with Pixy. IRAs and DRIPsare forms of ownership not types of investment. AFAIK any stock that can be purchased as aDRIP can also be purchased in an IRA. Firstdecide what you want to own, then decide howyou want to own it.The advantage of DRIPs are lower commissionsparticularly when invest small sums, such asdividend payments. IRAs have tax advantages.If you have $2000 lump sum to invest long termfor retirement, IMHO your better off with an IRA. If the stock does not pay dividends the DRIP isof little benefit. If the stock does pay dividends,any dividends in the DRIP will be taxed as ordinary income.This tax hit is more than the opportunity cost and commissions if you leave the dividend in a money market fund tobe invested with the next years $2000 IRA contribution.The main disadvantage of an IRA is that youcan only invest $2000 per year. This resultsin a small accounts which can have high commissions,and limited diversification. The best way round this is to contribute every year to make the account larger.
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