Investing Dictionary
Strategies

What is DRIP?

Automatically reinvesting dividends to buy more shares

Full Explanation

A Dividend Reinvestment Plan automatically uses your dividend payments to buy more shares instead of sending you cash. Over decades, this compounding effect dramatically boosts returns.

Real-World Example

$10,000 in a dividend stock at 3% yield — DRIP vs. spending dividends makes a massive difference after 30 years.

Pro Tip

Most brokers offer automatic DRIP at no cost. Turn it on and forget it.

Related Strategies Terms

Value Investing

Buying stocks that are cheaper than they're worth

Sector Rotation

Moving money between sectors depending on the economic cycle

Tax-Loss Harvesting

Selling losing investments to reduce your tax bill

Index Investing

Buying funds that track the whole market instead of picking stocks

View all Strategies terms →

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