The pros and cons of a dividend reinvestment plan May 20th

The “Big Five” Canadian banks offer investment funds and include Royal Bank of Canada, Toronto Dominion Bank (TD Canada Trust), Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce (CIBC). Let’s explore the best place for you to invest.
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 mutual funds

What type of insurance does a home-based business need? + MORE May 25th

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investment

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What to consider before transferring RRSP money to a company pension plan Jun 3rd

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Q. What are the pros and cons of using a DRIP  in an unregistered account?
–Doug
A. Many stocks and exchange-traded funds offer a Dividend Reinvestment Plan, or DRIP, for investors. A dividend reinvestment plan does just what its name suggests: It reinvests dividends paid by a mutual fund, stock or ETF into more shares or units of that same mutual fund, stock or ETF.
If you have an investment advisor, they can determine which securities are DRIP-eligible. RBC Direct Investing provides a list of Canadian and U.S. stocks and ETFs that are DRIP-eligible, and that should apply for most do-it-yourself investors at other brokerages as well. Mutual funds generally reinvest all distributions into new units as a matter of course.
There are pros and cons to dividend reinvestment plans, Doug, as you suggest. Here are the top three reasons to DRIP and not to DRIP.
Reinvestment helps your money grow
The magic of compounding is one of the definite pros of dividend reinvestment. If you own $100 worth of a stock that grows at 4% per year and pays a 2% dividend, and you reinvest your dividends, you will have $179 after 10 years…

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