Replies to post #41045 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Hi M, Re: Dividend payers, reinvestment vs taking cash..............

With recent times being what they are, we've been getting substandard yield on cash. Under these circumstances and with no foreseeable change in that status it might be better to accumulate shares by reinvestment for now.

My study was nearly a 20 year one and was in a different 'era' than our current one. The long term history showed AIM doing a marvelous job of "Timing" the purchase of shares with the cash dividends during typical bond market cycles. It proved to be better than DRIPing the reinvested dollars into shares, but not a tremendous difference. Further, interest on Cash during that time was civil compared to the last decade or so.

If you don't need the cash for living expenses now, and since cash earns zilch, maybe reinvesting for now makes sense. You can always change to cash dividends in the future if interest rates go back to being market driven rather than falsely maintained by the FED.

[Toofuzzy]

Hi Mvls

I would not use dividend reinvestment plans. I would let AIM decide into which security the cash should go, and when.

Also at the present time the market is kind of high and accumulating a little extra cash is not a bad idea.

Also in a taxable accountt it is a nightmare, though less so now that brokers need to report basis.

Toofuzzy