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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: DRIP V. IRA Date: 2/12/1998 6:54 PM
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Kdub,

<<I'll try to give some specifics but it still might be a little vague because I'm an IRA greenhorn. What if I were to Drip $50 a month into Campbell's and $50 a month into Johnson and Johnson vs. $100 a month into a high risk IRA since I have a good 35 years until retirement. If this example is still incomprehensible could you give an example of where a DRIP might be more beneficial and one where an IRA would be the better choice. Thanks.>>

Again, you need to specify the return you expect on either investment. If the two stocks can average 12% per year and your high risk investment can average 13% per year, go with the high risk. OTOH, if the stocks can get 15% and the high risk option is expected to average 13%, the DRIP is better. The decision isn't whether to use a DRIP as opposed to an IRA. Instead, it's to decide which has the highest expected return.

Regards…..Pixy
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