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I am inquiring about the ABC's of setting up a DRIP portfolio. Correct me if I am wrong: 1) It appears that one has to join something like Moneypaper, 2) Then send them enough money as outlined in their pamphlet to buy at least 1 share of each company which you want to set up Drips, 3) I am less clear about the next step -- Do you then send a check to each individual company each month? Thus, 4 Drips, then 4 different checks to the companies or is there a central broker so you can send one check detailing how you want it divided?

Additionally, I would like to set this Drip up for my two children. They do not make enough money to invest themselves and this appears to be a good way to build up a portfolio for them. Has anyone any experience or thoughts on how the best way to set this up to minimize taxes -- specifically inheritance taxes.

Thank you in advance for any help.
mspan

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The best place to start would be to read the FAQ, above the message. You'll find that MoneyPaper is just one of the ways that will allow you to start investing in DRiPs.

george
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A good source of information on DRIPs in general as well as the requirements of individual plans is www.netstockdirect.com
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mspan,

Today I mailed the enrollment form for my first two Drips (INTC and KO) ever! If you're interested, here's what I did:
1) I logged-on to www.moneypaper.com and clicked on the link titled "Become enrolled in Dividend Reinvestment Plans".
2) I selected one share each of INTC (Intel) and KO (Coca-Cola) and printed out the form for ownership in a Trust.
3) I filled out the information on the form, wrote a check for the amount indicated on the form (price of share prices + cushions + service fees + commissions) and then mailed it to Temper of the Times.

That's it.

Now, after I've received confirmation of my enrollemnt in the DRIPs, I can mail monthly payments to the transfer agent (INTC = Harris Trust & Savings Bank and KO = First Chicago Trust) to purchase more shares; or, I can set up automatic debits from my checking account to purchase stock without me having to mail a check.

Note: The KO plan will charge $1.00 for the automatic debit whereas INTC does not charge a fee.

Hope this helps!
Matt O.
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Note: The KO plan will charge $1.00 for the automatic debit....

Does that apply to all direct-from-your-bank-account transfers, or just to automatic ones? i.e. Could I set up a DRiP with KO and--whenever I wanted to buy more shares--just tell them to take however much from my bank account? Would they charge the $1 fee for that?
I e-mailed First Chicago about that, but they haven't gotten back to me yet.

And it's not that the $1 fee is that big a deal; it's just that I have a philosophical problem paying any fee for a transaction that two computers should be able to perform between themselves, with no human intervention.

-john
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There are nearly 1600 companies that offer direct stock purchases. Some require one share purchased in your name, but many do not. Netstockdirect.com is a great site to find out as much about DRIPs as possible. The website has 800 numbers to call and get enrollment forms for the companies you are interested in. Read several of Carlson's columns for good info too.

Companies let you in for anywhere between $50 and $1,000 initial investment. From there, each company has there own amount of separate cash purchases $20, 25 and 50 are common.

You do have to send a separate check to each company, but once it is in; all you have to do is watch your money grow.
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I started DRiP's with EXXON, JOHNSON CONTROLS, and WPS RESOURCES a few years ago. At that time, there were no set up fees or any costs associated with purchases. EXXON and JOHNSON CONTROLS have free monthly debit programs from your checking account. EXXON AND JOHNSON CONTROLS pay a respectable dividend and steady capital growth. I selected WPS RESOURCES for its healthy dividend...it's not a stock for capital growth. Good luck.
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I have set up UGMA (Universal Gift to Minors Act) portfolios for my 3 granddaughters. The first thing to consider is that when the child turns 18, the portfolio BELONGS to them, and they can spend it on the biggest 18th Birthday Party in the county. Or a big drug party, or going to Tiajuna to see how many houses of ill-repute they can find, or anything else they may think of. IF you have confidence about how they are being raised, and how you think they will turn out, it's a great idea, but there are obvious dangers.
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<<I have set up UGMA (Universal Gift to Minors Act) portfolios for my 3 granddaughters. The first thing to consider is that when the child turns 18, the portfolio BELONGS to them, and they can spend it on the biggest 18th Birthday Party in the county.>>

This is true - but educating them along the way should keep them interested in how the stock is doing AND how important it will be not to squander the money. If they realize who gets to pay the taxman, they may not be so quick to cash in the stocks.

My daughter has some DRiPs, Coke(KO) being one of them. When she sees the Coke trucks on the road, she now understands they are delivering "her" products. Her lessons up through the age of 18 will include how her parents want to help with her education should she choose to go to college. Yes, it will be her money - but, if she requires more - she'll have a hard time convincing me she could handle it :-) **note to self: check back on this post in 11 years.

I highly recommend getting "TMF's Investing Without A Silverspoon" and making sure each household has a copy so the parents may learn about the art of DRiPping. Before the year is up, I'll have distributed at least 6 copies to relatives/friends. I wonder if they offer a quantity break discount :-)

Odee
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I'm new to this & not have made an investment as of yet , but a friend at work told me to check ( JAMS ).
It pays out 11.5%!!!
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I'm new to this & not have made an investment as of yet , but a friend at work told me to check ( JAMS ).
It pays out 11.5%!!!


When I see something like that, I'm tempted to run screaming for the hills...(G) And here's a good reason why:
http://quote.fool.com/snapshot/snapshot.asp?symbols=JAMS&currticker=JAMS

That dividend represents 150% of the stocks earnings. Now, I don't know about you, but I prefer my companies to keep some money for growth, rather than cannabilizing the company's resources to pay the owners a dividend (on which they get to pay taxes as regular income). Long-term capital gains taxes are lower, after all. So why would I invest in a company that looks like it's going to pay itself out in dividends? Even if the total return (pre-tax) is similar, the post-tax return will be much higher on a company that grows because of postponing the taxes and paying a lower rate down the road.

Never go on an adventure without a hat!
Indy

http://users.interconnect.net/indy/
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> I am inquiring about the ABC's of setting up a DRIP portfolio. Correct me if I am wrong: 1) It appears that one has to join something like Moneypaper, 2) Then send them enough money as outlined in their pamphlet to buy at least 1 share of each company which you want to set up Drips, 3) I am less clear about the next step -- Do you then send a check to each individual company each month? Thus, 4 Drips, then 4 different checks to the companies or is there a central broker so you can send one check detailing how you want it divided? <


You do not necessarily have to join Moneypaper or similar service. Many DRIPs may be started by direct purchases from the company. Go to http://www.stockpower.com to research details of most DRIP plans or direct stock purchase plans (DSP's). You can even completely enroll and purchase stock in some plans right at the site. I started my first DRIP with Home Depot via this site. Some companies make it very easy to start DRIPs by charging NO purchase fees on DSPs and by having LOW initial purchases. For instance, you can invest into Wisconsin Energy for as little as $50 which will get you a little over two shares and a fairly good dividend payout ($1.56/share annually with a stock price of about $22/share).

> Additionally, I would like to set this Drip up for my two children. They do not make enough money to invest themselves and this appears to be a good way to build up a portfolio for them. Has anyone any experience or thoughts on how the best way to set this up to minimize taxes -- specifically inheritance taxes. <

I imagine someone else would be more qualified to answer this question regarding taxes...
Welcome to DRIP's!
Thomas


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A) You can buy one or ten shares to get into to a DRIP plan, depends upon the company.

B) Tax troubles down the road because dollar cost averaging makes it hard to determine your basis.

C) No monthly payments necessary; I prefer to buy when the blood is running in the streets and I mell fear.

D) Then I transfer the stock to one of my accounts.

E) Make sure you are JTROS, in case your child would die in an accident. No probate.

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A) You can buy one or ten shares to get into to a DRIP plan, depends upon the company.

The amount varies more than this. Most are 1 share, some are 10, and others are 50, and so on.

B) Tax troubles down the road because dollar cost averaging makes it hard to determine your basis.

I don't see any tax problems. One only need know the total they paid for all shares held longer than one year and one day and the total for all shares held less than that. Save all your statements and you'll be fine with a calulator or adding machine.

Fool on!

Vince
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B) Tax troubles down the road because dollar cost averaging makes it hard to determine your basis.

This is only true is you keep track of things on paper. If you use a spreadsheet, then the calculations are done automatically and you just need to read them.

george
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