Buying Shares of Stock with a Drip Investing Strategy
My story as an Investor is grossly shadowed by many famous Stock-Market Gurus. My income from employment and investments is modest but much of my comfort in life stems from being very conservative. I have a smaller home and drive a Prius! At times I even hang my laundry to dry. As an Investor I'm far from Bill Ackman and Warren Buffet! I have had a lot of ups and downs with my investments. Over a span of 25 years I made some painful mistakes (Technology, Internet) and I've opened bottles of Champagne. I started buying Stocks, with my Father's guidance, at the age of 16. I'm fairly seasoned!I have also got my feet wet, as an entrepreneur, enough times to know buying stocks can be a better and less stressful gamble. As the old cliche goes, "if you can't beat them, join them". Big businesses have the market flanked, are branded, and are well oiled machines. Best of all, many Corporations are Publicly Owned, and Shares can be purchased through Stock Exchanges.
Technology has made what many call, "Drip Investing," more applicable. Gone are those days of going to an Investment Banker and hearing their guidance or placing orders through their Firm. Today we have several options to be self-directed Investors. In addition, we have resources to conduct research and listen-in to Conference Calls from home (A Must). More importantly, the Internet Brokerage has created what I believe is the best way to Invest in the Stock Market, "DRIP Investing".
Drip Investing
I'm quite certain most Investors see the term, "DRIP," and assume this is another rant about Dividend Re-investment Plans. It's not. Although I often re-invest my Dividends too. This is a strategy I stumbled across accidentally because I started using an Online Broker that allowed Partial Share Purchases.
A Drip Investing Plan is where Stock purchases occur based upon the funded dollar amount on a set day. In the past, if an investor wanted to invest, he or she had to figure on the number of whole shares divided by the allotted amount. In contrast, Drip Investing will invest a set amount and secure partial share in many circumstances. For example, one could purchase $900 worth of a $600 per share stock. In that situation, the Investor secure 1.5 Shares of the Company.
Drip Investing is automated. In my situation, funding the account is fairly straight forward. I have chosen to deposit a percentage of my income into my Brokerage Account. This was done through my Employer's Direct Deposit payment option. On the Direct Deposit setup I specified a percentage of my income to be allocated towards the Brokerage Account. Therefore, a deposit is made to my Brokerage Account each time I'm paid.
Online Brokerage accounts are typically Self-Directed. Therefore, choosing an Investment is at the Investors discretion. In my case, I look for the Gorilla in the ring that is paying a decent Dividend, when compared to more secure (less risky) options. Today's 1% secure account rates are not enough for me. I seek a Stock that pays a 3% (or greater) dividend and I Drip Invest over the course of a year. Each year I chose a new stock.
For myself, this is done through Capital One Investing's Share Builder Plan. If any readers are interested, I have included my referral code below. Using the code before 12/31/2016 will give me a referral bonus. One quick note, Drip investing can be more expensive. Although the Purchase fee is much less, it creates a lot more purchases depending on the settings. Mine occur typically about every six weeks. Using this Drip strategy tends to follow a stocks up and downs over the course of a year.
