To reinvest or not reinvest dividends???
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To reinvest or not reinvest dividends??? Sue wrote....
We are an investment club of 14 women in existence for five
years. Discussions have come up at meetings about automatically
reinvesting all of our dividends in their respective stocks.
......... My concern is some stocks pay such a small dividend, it would
take ten years to obtain one share, and it would seem like a lot of extra
book-keeping for this small gain.
While being a strong supporter of the concept of reinvesting income,
dividends, and realized profits, I don't advocate the concept that all
dividends must be reinvested directly back into the company that paid
them. While such a process may lend itself to the concept of dollar
cost averaging in a particular single investment, my club takes its
dividends, accumulating them in our money market account, purchasing
additional stock of our choice once a thorough study and analysis has
been completed.
Is there a lot of extra work for the treasurer in these
automatic reinvestment plans as far as entering data and is there much of a
problem in discrepancies with balances in the computer program and
our brokers statements. We like to balance to the
penny.
I agree, a club's records should always
"balance to the penny".
As far as the reinvesting of dividends being "extra work" for the treasurer
is concerned, it doesn't have to be. Computerized club accounting
software such as www.bivio.com has taken
the drudgery out of compiling and maintaining the records of all the small
lots that are created when dividend reinvestment plans (DRIP's) are
used. In most cases, entering a dividend that has been
reinvested is just as easy as entering a dividend that is deposited into the
bank or brokerage account. Another option that many clubs enjoy is
that of bivio's premium services which are called AccountSync™ and AccountKeeper™. These services take the burden of everyday recordkeeping
away from the treasurer, regardless of the complexity of the
transactions. For more information on these and other premium
services offered by bivio please see.... http://www.bivio.com/hm/services.html
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