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Started By
Message
DRIPs or Index / Mutual Funds
Posted on 3/29/14 at 6:47 pm
Posted on 3/29/14 at 6:47 pm
I have about 30 years until retirement and have about $20k in my Roth IRA. Do you think it would better to buy 4 index / mutual funds of $5k each or 4 DRIPs of $5k each such as Coke, Exxon, Altria and AT&T? If you went the DRIP route would you add one more company each year or add to the current companies?
3
Posted on 3/29/14 at 6:53 pm to bogart
4 index/mutual funds
Posted on 3/29/14 at 8:48 pm to bogart
A DRIP is technically a dividend reinvestment program of any kind, which you can do with any kind of dividend paying equity/fund/etf.
If you get an account at Vanguard, you can buy their ETFs and get a broader range of the market... then put money in a little at a time for time diversification at $0 fees.
If you get an account at Vanguard, you can buy their ETFs and get a broader range of the market... then put money in a little at a time for time diversification at $0 fees.
Posted on 3/30/14 at 7:50 am to bogart
I've been doing DRIPS for 20 years now. I just have 4 companies and have added money to them but not every year.
I also have a mutual fund. In the last 10 years the DRIPS have outperformed my mutual every year.
I also have a mutual fund. In the last 10 years the DRIPS have outperformed my mutual every year.
Posted on 3/30/14 at 9:17 am to Zach
Do you mind saying who those companies are?
Posted on 3/30/14 at 11:24 am to bogart
In order of performance:
1. Chevron
2. Procter and Gamble
3. United Technologies
4. Medtronics
None of them require you to have a broker to buy stock.
My mutual is an Eagle Fund being handled by a financial guy so he takes a cut. He's not doing a good job.
1. Chevron
2. Procter and Gamble
3. United Technologies
4. Medtronics
None of them require you to have a broker to buy stock.
My mutual is an Eagle Fund being handled by a financial guy so he takes a cut. He's not doing a good job.
Posted on 3/30/14 at 11:50 am to Zach
I used the think I was particularly clever with stocks. The more time goes by, the more I find myself diversifying. I'm seriously considering moving everything into a vanguard total market admiral fund (VTSAX) and just letting it DRIP for the next few decades while making regular contributions into it.
The thought of only paying .05% in fees gives me an investment erection.
The thought of only paying .05% in fees gives me an investment erection.
This post was edited on 3/30/14 at 11:52 am
Posted on 3/30/14 at 6:41 pm to Joshjrn
I am interested in how you guys that own drips sell your stock.
As cheap as brokers are now I don't see any real reason to do drips and lose the conveniences broker offer.
What am I am missing?
As cheap as brokers are now I don't see any real reason to do drips and lose the conveniences broker offer.
What am I am missing?
Posted on 3/30/14 at 6:47 pm to Zach
I'm a dumb arse when it comes to stocks and pretty much 100% of my investing is in real estate.
However, I like the DRIP method that you guys talk about here. I have about $15,000 in my Roth IRA (just cash) and want to start the method like Zach has.
Does it automatically put the dividends back into more stock? I don't want to get a check.
However, I like the DRIP method that you guys talk about here. I have about $15,000 in my Roth IRA (just cash) and want to start the method like Zach has.
Does it automatically put the dividends back into more stock? I don't want to get a check.
Posted on 3/30/14 at 8:31 pm to I Love Bama
When I started this thread I was not aware that you can receive dividends from mutual / index funds. I currently own three different mutual funds in my IRA and rarely login to my account. I looked closer and noticed I had received about $450 in dividends in December which purchased more shares.
Now that I know you can get dividends on mutual / index funds why would you buy a DRIP in a single company when you can be more diversified with a fund and get dividends as well?
Now that I know you can get dividends on mutual / index funds why would you buy a DRIP in a single company when you can be more diversified with a fund and get dividends as well?
Posted on 3/30/14 at 9:00 pm to I Love Bama
quote:DRIP is a setting or "method". You can chose weather or not you want to reinvest the funds from dividends automatically or receive the cash in your account.
Does it automatically put the dividends back into more stock?
Some people like high dividend stocks only. Some mutual funds cater to this, but some people like specific stocks (CVX, KO) which is why they would choose them instead of a mutual fund.
Posted on 3/30/14 at 9:01 pm to bogart
I have no idea, which is likely evident by my previous post 
Posted on 3/30/14 at 9:09 pm to ell_13
Mutual funds/index funds have loads on it correct? I mean if you really just like 5 DRIPs, you buy them yourself and it doesn't cost you anything
This post was edited on 3/30/14 at 9:16 pm
Posted on 3/30/14 at 9:15 pm to GenesChin
If you like 5, you buy those five and it won't cost you fees, correct.
Posted on 3/30/14 at 9:34 pm to bogart
Mutual Funds have fees. Some funds are worth the fees. Some are not.
You can get dividends in stocks and reinvest them in a common stock broker account PLUS you get a lot of reporting and you have the ability to sell them with a click of a button.
Drips are simply plans companies have to buy stock directly from them. You don't buy at real time stock prices and neither do you sell there. If the company is not willing to buy stocks back you have to transfer the stocks you have bought in a DRIP to a broker to sell them. DRIPs were great when it cost $100 per transaction to buy a stock but I see little need in them now when you buy for $5 in a brokerage account.
You can get dividends in stocks and reinvest them in a common stock broker account PLUS you get a lot of reporting and you have the ability to sell them with a click of a button.
Drips are simply plans companies have to buy stock directly from them. You don't buy at real time stock prices and neither do you sell there. If the company is not willing to buy stocks back you have to transfer the stocks you have bought in a DRIP to a broker to sell them. DRIPs were great when it cost $100 per transaction to buy a stock but I see little need in them now when you buy for $5 in a brokerage account.
This post was edited on 3/30/14 at 9:36 pm
Posted on 3/30/14 at 9:41 pm to GenesChin
quote:
Mutual funds/index funds have loads on it correct? I mean if you really just like 5 DRIPs, you buy them yourself and it doesn't cost you anything
Some have loads, some don't. For example, the Vanguard fund I referenced earlier is a no load fund.
Posted on 3/30/14 at 9:44 pm to Joshjrn
quote:
Some have loads, some don't. For example, the Vanguard fund I referenced earlier is a no load fund.
But all have fees.
ETFs have less fees and can be bought and sold like stocks.
Posted on 3/30/14 at 9:48 pm to Joshjrn
I have a TD Ameritrade account.
I just invest in T, GE, MAIN, V, etc. and just let her rip. I do...not...touch. Just let the fractions of a share build up every 3 months.
No mutual funds or any of that for me. Although I want to open a Roth IRA for tax purposes. Here I know I can't sell them until I retire, which is fine. The reason I have my T, GE, and others is because I want to be able to sell if I have a financial emergency or something.
If I got the Roth, could I just continue to buy my stocks like I currently do?
I just invest in T, GE, MAIN, V, etc. and just let her rip. I do...not...touch. Just let the fractions of a share build up every 3 months.
No mutual funds or any of that for me. Although I want to open a Roth IRA for tax purposes. Here I know I can't sell them until I retire, which is fine. The reason I have my T, GE, and others is because I want to be able to sell if I have a financial emergency or something.
If I got the Roth, could I just continue to buy my stocks like I currently do?
Posted on 3/30/14 at 10:48 pm to I B Freeman
quote:
But all have fees.
Yes, they do. Some are very reasonable. Some are not. As far as being able to buy them "like stocks", that doesn't strike me as terribly important in the context of long term investment. In fact, their nature typically doesn't allow for automatic investment, which is a deal breaker for me.
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