George Robertson, CFP, CRPS, AIF

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What Is a Drip?

A DRIP (Dividend Reinvestment Plan) is actually a form of dollar cost averaging - a strategy of depositing equal amounts of money into a stock or mutual fund at regular intervals, resulting in the purchase of more shares when prices are down and fewer shares when prices are up. DRIPs allow for the automatic reinvestment of stock or mutual fund dividends for the purpose of gaining more shares, sometimes at a discount and, in many cases, without added fees. While dollar cost averaging doesn't guarantee a profit-or remove the risk of loss-this technique does offer an investor the potential to substantially increase holdings over time.

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