What are DRIPs?
Direct Investment Plans, otherwise known as Dividend Reinvestment Plans, or DRIPs, provide a simple way to reduce risk, yet many people aren’t even aware of them.

With the financial markets in such turmoil, this is a great time to learn about Direct Investment Plans, which is why YoungMoney.com and The Moneypaper are introducing a new section dedicated to them. Simply click the “Direct Investment Plans” dropdown below “Investing” or go directly to www.youngmoney.com/drips.  We’ve made it easy for you to sign up and get started.  And, before jumping in, you can get a lot of information in our “About DRIPs” section.

As you know, many people have limited amounts to invest. Say you’d like to become an investor, but you have only $500 to invest each month or each quarter (or even $250). With DRIPs, you can establish a portfolio diversified among 10 different industries and stay within your budget! That’s because with DRIPs, you can start out with as little as a single share of stock and build holdings by investing as little as $50 or $25 in each company—to buy whole or fractional shares (depending on the market price of the stock).

Is this the right time to start investing?
One never knows–if one is making lump-sum investments. But, with DRIPs, now is always the right time to invest. That’s because DRIPs make it easy to make regular investments. When the market is up, your investment will buy fewer shares, and when the market is down, your investment will buy more shares. You’re essentially buying more shares when they are selling at bargain prices.

Only DRIPs make dollar-cost averaging and wide diversification of assets–time-tested investment strategies — efficient, economical, and easy to implement.

The bottom line: DRIPs ensure that the control over your investments remains in your hands — not a broker’s and not a mutual fund’s — and, over time, that you are likely to amass substantial holdings at a cost that is lower than the average price of the stock during the period in which you were investing.

www.youngmoney.com/drips