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All,

I've recently decided to take my first DRiP plunge into Coca-Cola (KO). (This after some months of research).

I bought a 5 share position in my E*Trade Portfolio, and was prepared to contact KO's plan adminstrator directly, EquiServe - First Chicago Trust, for my "Stock Power Form" in order to transfer the certifcates into my name.

However, I've found that E*Trade offers to set up positions in DRiP programs at "no additional fee".

Is E*Trade simply saving me the leg work as a customer service? Is their process the same as the manual process? (i.e. will the stock certificates be transferred to my name, and then held for safe keeping by the plan administrator?). And my final question, will E*Trade try to sneak in any additional fee's above and beyond the plan administrators?

I called E*Trade, but the Gentleman on the phone had no idea how their DRiP program worked, and had to verify that they did not charge any additional fees for setting up this service. Can anyone here confirm this to be true?

Thanks for your time!
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Hi, sburger!

What E*Trade is offering is not a true DRIP. They will reinvest divdends for you (sometimes with restrictions, depending on the broker, however, you will not be able to make additional cash purchases (OCPs) of stock without commissions.

You will not be enrolled in Coke's Drip, as you must be the shareholder of record to be eligible. This means the share must be in your name and not in the broker's (street) name.

If you wish to enroll in the Coke Drip, you'll need to instruct E*Trade to transfer all or some of the shares to you, then contact First Chicago Trust. I believe E*Trade charges $5.00 for the transfer.

Thanks for posting and Fool on!

Vince

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Thanks for the information Vince. I've e-mailed E*Trade about their "drip" but am still trying to clarify what fees may be charged.

One advantage I might see to using E*Trade is that I might be able to enroll my ROTH account. I suspect that any additional purchases will be hit with the $14.95 commission so that means that I won't be able to deposit small amounts (i.e $10) because that would be too expensive in fees. It seems that you would have to invest enough money to stay under the 2% reinvestment cost that Gardner mentions in the book.
To do that for me would be to purchase shares about once or twice a year. Would the potential tax savings in the end help here or is there any tax savings under the ROTH plan?

Too many questions.
Greg
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Hi, Greg!

The Roth IRA is different from a traditional IRA in that contributions into a Roth are not tax-deductible. There is no tax benefit upfront.

The beauty of the Roth is at the end, when you can withdraw the funds and pay no taxes at all.

Both allow you to accumulate wealth without paying taxes along the way on your profits, the regular IRA eventually hits you up for taxes on those profits (plus your initial contributions). The Roth doesn't. As long as you follow the rules, you never pay taxes on gains.

Fool on!

Vince
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Thanks!!

I'll get in touch with E*Trade.

Last question. My position in E*Trade is 5 shares. Since I only need one share in my name to get in on the "Real Thing" (i.e. Coke's "official" DRIP), should I keep the four remaining shares in the E*Trade "DRIP"?

Your thoughts?!

(*Yes, the "Real Thing" pun was intentional*)

Thanks,
Steve
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Hi, Steve!

I guess it depends on whether or not you want all your shares at the same place and the dividends for each invested in the same manner.

Since the dividends are being reinvested by E*Trade, I don't think it matter much one way or the other.

Does E*Trade invest in partial shares or wait til your dividends equal a whole share. That might be a factor.

Fool on!

Vince

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I transferred all 7 shares to KO to establish a DRiP. I think it's easier to keep it all under one roof.
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Hi Robbie!

Did you transfer all 7 shares of KO from E*Trade to your Coke Drip?

How did you handle the certificate transfer? Is it being held by KO's Plan Admin?

Could you give me any insight into the process you went through with E*Trade and KO's Plan Admin?

Thanks!

Steve
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Did you transfer all 7 shares of KO from E*Trade to your Coke Drip?

Hi Steve

Yes, I transferred all shares to First Chicago Trust, which handles KO's DRiP plan. I e-mailed suretrade (my broker) to transfer the certificates to my name and to my house. It took 3 weeks. At that point, you are now registered with KO as a shareholder. I called KO and they sent me a form to either send in additional payments or enroll in a monthly automatic debit plan. They charge $1 for the auto debit, otherwise there are no fees (besides selling shares). I just send in a check each month. I transferred all shares simply because I wanted to keep KO ownership in one place. I still have shares of other companies at suretrade, but I don't DRiP with those.

How did you handle the certificate transfer? Is it being held by KO's Plan Admin?

By e-mail with suretrade. Equiserve aka First Chicago Trust handles the transactions.

Could you give me any insight into the process you went through with E*Trade and KO's Plan
Admin?

It takes a little time. For instance, to establish auto debit can take 2-3 months, whereas sending in my check can be done right away. I'll send you the number to call for KO as soon as I find it!

Hope this helps!!
Thanks

Robbie
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Hello again Steve!

The number for KO investor relations through First Chicago Trust is 1 888 265-3747.

Take care!!
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