cannew wrote: ↑
21 Jun 2017 16:19
adrian2 wrote: ↑
21 Jun 2017 15:33
I've recommended investing with no transaction costs, so my "generic buy" does not involve commissions.
So the answer to your question is: the same number of shares / units are purchased with $150 in a DRIP vs. $150 in other money.
Investing today vs. next week vs month end vs. quarter end makes no difference; just do it.
The more frequent transactions (e.g., $150 in dividends) would be more of a headache in tracking. For a taxable account, it's going to be a bigger headache.
Care to name the specific no fee "generic buy" Hers are BNS.
Widely diversified, low cost index funds such as the ones from Tangerine, PC Financial, TD Bank etc.
Mawer Balanced is also a good choice.
A single stock carries a lot of risk that can be avoided.
As mentioned before we are talking about 4 transaction per year to record, not much of a headache.
Let's reverse engineer your example.
$150 per quarter is $600 per annum, that works out to about 200 shares of BNS worth about $16k .
If she does not save a dollar more, just the forced savings imposed by the DRIP, she will not get very far.
Let's say she can only manage $100 per month, which will result in 16 transactions per year, and $1,800 total investment.
It makes no practical difference whether she has 12x$100 monthly investments + 4x$150 DRIP's vs a single investment of $1,800 once a year. In a taxable account, it's a significant difference in recording 1 transaction vs. 16.
If one feels it's easier to save $100 every month compared to coming up with $1k+ every year, my first suggestion is at least do it in a registered account. And my second suggestion is to try and save a bit more.