Dividend reinvestment plan
Okay kiddo, imagine you have a piggy bank where you save your allowance money. Every time you get some money, you put it in the piggy bank so it grows bigger and bigger over time.
Now, let's say one day you decide that you want to make your piggy bank even bigger without actually putting any more money in. How can you do that?
Well, you can invest the money in your piggy bank into something that can grow over time, like a flower or a plant. As the plant grows, it gets bigger and bigger, just like your piggy bank.
But instead of a plant, some grown-ups choose to invest their money into something called stocks, which is like buying a tiny piece of a company. And when you own a piece of a company, sometimes they pay you some extra money for being a good investor.
This extra money is called a dividend. And some companies have something called a dividend reinvestment plan which means, instead of receiving the extra money as cash, they use it to buy more stocks for you, just like how watering a plant makes it grow even more.
So, in simpler terms, a dividend reinvestment plan is when a company takes the extra money they give you for investing in their company and use it to buy you more stock so that you can have even more money in the future.
Now, let's say one day you decide that you want to make your piggy bank even bigger without actually putting any more money in. How can you do that?
Well, you can invest the money in your piggy bank into something that can grow over time, like a flower or a plant. As the plant grows, it gets bigger and bigger, just like your piggy bank.
But instead of a plant, some grown-ups choose to invest their money into something called stocks, which is like buying a tiny piece of a company. And when you own a piece of a company, sometimes they pay you some extra money for being a good investor.
This extra money is called a dividend. And some companies have something called a dividend reinvestment plan which means, instead of receiving the extra money as cash, they use it to buy more stocks for you, just like how watering a plant makes it grow even more.
So, in simpler terms, a dividend reinvestment plan is when a company takes the extra money they give you for investing in their company and use it to buy you more stock so that you can have even more money in the future.