People often laugh when I say that starting a dividend re-investment plan (DRiP) is like planting a seed to grow your very own money tree. But in my experience DRiPping over the past few years, I’ve watched my dividend income grow from a few cents, to a few dollars, to well over a thousand dollars. So, at least to me, the proverbial money tree is a great way to describe the power of DRiPs.
If you want to build wealth and one day be financially free, then you need to set yourself up to succeed. DRiPs are an important part of my financial plan because after some initial set up, they run on auto-pilot which is great because I don’t have to do a thing except sit back and watch my dividends grow. I set things up so that my monthly stock purchases and dividend reinvestment are all done automatically.
Not only do I find this to be a convenient way to build up positions in companies that I plan to hold for the long term, but this system guarantees that I’m steadily growing my wealth and dividend income. I can say with a fairly high degree of certainty that my quarterly dividend income will be higher next quarter than this one and so on. It’s a great feeling to always be growing my passive dividend income.
Automatic Dripping is also a huge time saver for me. Like many others, I find that my time is stretched to the max. Between my job, caring for 2 children under 3 years old and the major renovation work at my house, I simply don’t have the time to play a more active role with my investments. But that’s okay because I find the more hands-off I am with my investments, the better things work out. The great thing about being a dividend investor is that once you get everything set up, it requires very little maintenance. Just sit back and collect those dividends!
In fact, as I write in my monthly dividend income updates, I’m constantly surprised at how fast my dividend income is growing. It really has taken on a life of its own. This is the power of compounding at work which is why starting a DRiP is like growing your very own money tree.
For more information about DRiPs and how to start one, check out my DRiPs Page. It explains what DRiPs are, their advantages and disadvantages, which companies make excellent Dripping candidates, and has a step-by-step guide on the process of starting one.
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