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Is Investing as Little as $20 in Dividends Reinvestment Plans a Scam?

By Edited May 11, 2014 1 1

Is investing as $20 in dividends reinvestment plans a Scam?

When you have worked hard to earn your money, the last thing you will like to see happen is been scammed off those precious little earnings. Most people have been scammed by investment companies that give bad financial advice. When you are new to dividends reinvestment plans, you will often be told that it is the best place for starters to invest their money. Well, investing your money in dividends reinvestment plans is not a good or bad idea. The only issue is that you need to know what you are getting yourself into. Any type of investment carries a certain level or risks.

There are those that will say that investing as little as $20 is the best way to go for new investors. When you think of investing $20 in dividends reinvestment plans, you will be delighted because that is not such a big investment. However, you can easily lose that money. Losing $20 dollars that you invest in dividends reinvestments plans is probably not a big deal. However, you will have to bear in mind that the main aim of investing your money in to make profit.

So why will investing $20 in dividends reinvestment plans be a scam? The problem with investing $20 in dividends reinvestment plan is that you will probably not see any gain from investing so little. So why did you get the advice that $20 invested in dividends reinvestment plan is a good deal?

Those who are trying to encourage you to invest your money will not want to scare you away. They know you do not understand anything about investments and you are probably worried that you might lose your money. These financial investment experts feel that you will be less worried to part with $20 than giving away $1000 in dividends reinvestment plan. You need to know that such an amount invested in dividends reinvestment plan will be throwing your money away. You will be better off going to Mcdonald's and buying a happy meal. Another issue with investing just $20 in dividends reinvestment plans is the notion of time. How many years will it take you to see anything worthwhile from your $20 investment? Dividends reinvestment plans will also require an important amount of paper work which can make the $20 investment more of a hassle. That is why the advice given to people to invest as little as $20 in dividends reinvestment plans can be a scam (losing your money).

Is dividends reinvestment plan a scam: What is the minimum to invest?

There are those who say that the absolute minimum amount to invest in dividends reinvestment plans is $100. However, that is not talking about the implications of investing so little. It is true that investing $100 in dividends reinvestment plans is better than investing in $20. If you are going to do that, you will need to bear in mind the golden rule of financial investment, "Do not invest the money you cannot afford to lose" With that in mind, your $100 investment in dividends reinvestment plans will have to be forgotten for a long time(years). With this type of investment it is often said "don't hold your breath". Time should be your friend if you invest $100 in dividends reinvestment plans

Is dividends reinvestment plan a scam: It is worth it

This article is not trying to discourage your from investing in dividends reinvinestment investment plan. You just need to be aware that investing very little as $20 makes no sense and you will be better off giving that money to charity or doing something else with it. On the other hand if you have more money and you want to give dividends reinvestment plans a try, you need to be prepared to put in the time in order to see any benefits from your investment.

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Comments

Nov 4, 2010 8:59am
Deborah-Diane
Good information on dividend reinvestment plans. Years ago I worked a few months for a major company that had a dividend reinvestment plan. During my time there, I managed to accumulate only 3 shares of stock. I held onto it, and the stock split over and over again. Eventually, it grew to 150 shares worth $30 a share!!! I sold it for $1500. Sometimes these things do work out!
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