The Psychology of Investing in the Market

http://www.fool.com/dripport/whataredrips.htm

Drips are offered by companies to their shareholders as a way to buy stock directly from the company (usually through a transfer agent) in very small amounts to large amounts, and usually on a monthly basis if desired. The plans also reinvest all or partial dividends paid (it’s up to the shareholder) into more stock, thus the name “Dividend Reinvestment Plan.”

Now, we know Drip or DRP isn’t a very Foolish name, but for now it gets the point across: You’re reinvesting dividends, but you’re also “dripping” money into your holdings every month, ideally. Drip… drip… drip…. And that adds up over time.

The advantages of such plans are numerous, the most obvious of which being: You don’t need a large amount of money to start. You can open an account with as little as one share of stock. Let’s look at some other “perks.”