Since time is so critical to investment success, the more time you have, the better off you are. A 10 year old who starts setting aside money today will be tomorrow's millionaire. Notice that a key component in this investment equation, in addition to time, is the annual return on your investment. In order to achieve that return, junior's money will have to be invested in stocks. DRIPs - Perfect Investments For Kids Dividend reinvestment plans represent an excellent way for youngsters to exploit the power of time in an investment program while earning returns well above alternative investments.
DRIPs have several advantages for youngsters.
Having a youngster kick in to his or her own investment program is critical in order to get involvement and commitment to the program. And since you deal directly with the company, the child does not have to go through a broker nor endure broker calls. It is easy to set up an account for a child or grandchild. Companies offering no-load stock plans offer the easiest way to get started since initial shares can be purchased directly from the companies. Let's say that you already own shares in Coca-Cola.