Quote:
Originally Posted by Rain Man
You'd also think that the brokerage would want to present themselves in the best light. The current system of including the DRIP purchases underestimates the total return significantly. I'm mystified why they don't give us an option to only count investments made from external funds. It seems like it wouldn't be hard to do.
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Exactly, it would behoove them to show your returns in the best possible light. I have a bunch of academic textbook stuff that shows what Dripping can do over long term which is second in significance only to compound returns themselves.
This is particularly true during market downturns where your dollar cost average is reduced. If you have something that pays strong dividends it is quite significant.
I've hedged my portfolio with a good amount of VYM for this reason. Its S&P indexed and tracks that very well, but emphasizes stocks that pay higher dividends than the rest of the index. With a buy and hold strategy through a downturn you'll make out like a bandit vs a straight indexed fund