Eat Your Spinach

Chapter 5: Persevere: Accumulate Wealth

You have accomplished something few do. You have established yourself
as a disciplined saver and a committed investor. Your task now is to
maintain your discipline while continuing to accumulate wealth. To do this, you will need several tools. Most financial advisors recommend a “buy and hold” strategy. This isn’t a panacea and the compact phrase “buy and hold” conceals many nuances, some of them fairly nasty. But one of the positive implications is the notion of “dividend reinvestment”

Buy and Hold Stocks That Pay Safe, Increasing Dividends

Dividend reinvestment is a systematic method of accumulating shares of a stock that pays a dividend. After you purchase a stock, simply enroll in the company's dividend reinvestment plan (DRIP) and your dividends will be automatically used to purchase additional shares. Also, you may send voluntary contributions to purchase additional shares. For a mutual fund be sure to check off the dividend reinvestment option on your application form. Because you pay taxes on dividends, consider putting dividend reinvestment stocks in a retirement account so you can shelter the dividends from your current tax liability.

More in this chapter:

Examples of Dividend Reinvesting

Setting up Your Dividend Reinvestment Account

Buy Low Fee Exchange-Traded and Index Funds

Tax Shelter Your Gains

Use Dollar-Cost Averaging

What Can Go Wrong with Your Investing Plan?

Where to Buy

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