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May 22, 2000


Dividend re-investment auto invest plans

I was checking out Dell's website for its investment company and I stumbled accross numerous companies that Dell is invested in. One of these companies is a company that develops reinvestment plans for people. It is sort of like a DRIP (dividend reinvestment plan), but is slightly different.

You are limited to companies that choose to accept the plan, but the companies don't have to offer dividends such as DRIP's. The way it works is people sign up and choose the stocks that they want to participate in. Then, they have so much automatically dedected from their paychecks or checking account each month or pay period. Then, all of the money is put together for that particular stock and purchased each month.

In exchange for this service, you usually pay a small fee to participate and a small fee to sell. The fees are no longer very small, though when considering you can go out on your own internet brokerage account and purchase almost any number of shares for $10 a trade. The fees for these reinvestment plans are similiar to this and you usually lack the ability to purchase at a specific price and it may be difficult to sell stock as well.

Many mutual funds offer similiar services now, with greater flexibility and diversity.





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