Saturday, January 19, 2008

DRiPs - Selling Shares

This is the fifth installment of my series on DRiP investing.

Selling shares from a DRiP

Although having a DRiP in a company means that you are in the the long run, there will come a time when you may want to sell shares. This may be because you want to diversify your investments, or simply because you need the money.

A bit like setting up the DRiP, selling shares from it is often more complicated than doing it from your broker's account.

Some DRiPs will allow you to sell shares directly, for a reasonable fee (about $10 + a few cents per share). You simply have to inform the transfer agent who admisters the DRiP (usually in writing) that you want to sell a certain number of shares, and they will do so. Note, however, that you won't be able to time your sale precisely. They will probably be sold at the next reinvestment date.

For DRiPs that do not offer this option, you will have to get a share certificate for the shares you want to sell, and sell them through your broker. Your usual broker fees for selling shares will apply, and a few brokers will also charge you a fee when you deposit the share certificate into your account.

All of this takes time, so you have to know ahead of time that you want to do this. The advantage of this is that it eliminates the urge to try to "play the market" by buying and selling often. The disadvantage is that it takes longer to get to your money.

But you should only invest money that you don't need in the short term, so if you invest wisely, this won't be a problem.

To read the beginning of my DRiPs series:
  1. DRiPs - What are they?
  2. DRiPs - Registering Shares to Your Name
  3. DRiPs - Enrollment and Purchases
  4. DRiPs - Paperwork and Taxes

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