Choosing the Best Dividend Reinvestment Plan

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When choosing the best dividend reinvestment plan, check the setup and maintenance fees, find a plan that allows regular interval investments, and consider using an independent broker to diversify large amounts of money. Determine whether to open a dividend reinvestment plan or a typical brokerage account with information from a financial planner in this free video on investments.

Part of the Video Series: Investment Facts
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Video Transcript

Hi there, I'm Cathy Pareto, the founder of Cathy Pareto & Associates, certified financial planner here in Miami, Florida. In this clip we're going to talk a little bit about choosing the right or the best dividend reinvestment plan or DRP. When considering opening a DRP account, one of the things that you should look at when dealing with the company that where you're acquiring the stock is see if there's any kind of an account setup fees or ongoing maintenance fees. You want to be cognizant of these costs because the higher these fees might be, you will probably want to consider just opening up a brokerage account. The other thing to consider, and again you can do this directly with the company typically right through the company's website, if you are going to start investing in a DRP and you have a larger lump sum of money that you're going to start with, then you might want to consider actually opening that up independently with an independent broker or a discount broker like TD, AmeriTrade, Schwab, eTrade, etcetera, just as an example because then you'll be able to diversify those investments across different companies, not just subjected to one company DRP. If you're going to dollar cost average in, you may want to think about doing the DRP in regular intervals. So that's a little bit about how to buy DRPs and this has been Cathy Pareto in Miami, Florida.

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