Dividend Reinvestment Plan

Investing
#1

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Hello guys. I wanted to ask about the Divindend Reinvestment Plan (DRIP). I have seen the potential that offers the program, especially about the returns, and I wanted to apply the program for the first years.
However, is it possible to cancel the DRIP, anytime in the future if I want to?
I would prefer to have some dividends in cash too.

Thanks in advance !

#2

Hey Akis!

So… I’ve seen “Dividend Reinvestment Plan” used a few different ways. IN GENERAL, in a normal brokerage account, you always have the option to turn on or off dividend reinvestment.

For example, if you have a Vanguard account and hold an index fund, it will pay out dividends annually. And as your chart shows, if you “reinvest” those so it buys more of the same index fund, it amplifies your growth. And yes, in retirement you can turn that off and use those cash dividends for living expenses.

I’ve also seen DRIP programs refer to investments in an individual company or other types of investment vehicles. In that case, the answer is I’m not sure, depends on what type of plan it is. :slight_smile:

#3

Thanks Jeremy, I appreciate your reply! :slight_smile: