Don <dwzimm[at]telus.net> writes:

- quote -

Many brokerages will reinvest dividends at no cost and
track fractional shares as well. Fidelity, for certain.

There's nothing magical at reinvesting dividends. You
could just as well take dividends in cash and use it
for rebalancing and further diversifying.

Frankly, many of the DRIP programs impose worse costs
than doing it at a decent discount brokerage. And you
end up with that many more custodians to deal with. Not
much upside in my opinion.


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On 2009-04-10 17:51:26 -0700, Igor Chudov <ichudov[at]algebra.com> said:

- quote -

The SIPC insurance is reassuring to be sure, but I wonder what would
happen if a large number of brokerages all shut down at the same time.
I guess the same question could be asked about FDIC and banks. Strange
things seem to be happening nowadays.

Another consideration: You can't set up a DRIP if your shares are in
street name. At least it was that way when I set up mine.

Don, if you are worried about losing your stock holdings, you can
always keep a certificate at home. It is only mildly cumbersome and
has some important advantages, such as being a little harder for
someone else to track down all your assets, especially if stocks that
you own do not pay dividends.

Many brokerages, such as Ameritrade, do not really engage in other
business besides handling customer accounts, and they would be
unlikely to fail in a bad way. But, with modern computer threats,
hackers and so on, and financial shenanigans, being concerned is the
right approach.

Now, if computer records are not destroyed, realistically up to
500,000 USD is insured by SIPC, so I am personally not losing sleep
over my small Ameritrade account.

Note that declines in stock prices, of course, are not covered by
SIPC.

i

On 2009-04-10 14:56:33 -0700, PeterL <po.ning[at]gmail.com> said:

- quote -

It is risky to assume that, because something has never happened
before, it can't happen. In recent times, in financial matters, we have
seen a steady stream of occurrences that previously would have seemed
unlikely if not impossible. When a possible loss could seriously affect
one's financial health, extra caution would seem to be in order. Call
me paranoid.

On Apr 10, 2:37*pm, Don <dwz...[at]telus.net> wrote:
- quote -

Well then you have not been paying attention. Lots of banks have
failed before last year. But even in a difficult year like last year,
the FDIC has managed to take orderly transition by arranging seamless
transfer of bank assets. There has been not run on bank deposits.
For many it is a lot of bother to keep stock certificates at home.

On 2009-04-10 13:59:11 -0700, honda.lioness[at]gmail.com said:

- quote -

No, I have never heard of that. In fact, I have never even heard of
brokerages failing. But, you know, until this past year I had never
heard of big banks, big insurance companies, and big auto makers
failing either! Since it is not a whole lot of bother keeping the stock
certificates at home, I would rather be safe than sorry.

hobno...[at]webtv.net (H B) wrote:
- quote -

A good article on this from July 2008: http://www.kiplinger.com/columns/ask...2008/q0721.htm

Aside: The only stupid question is an unasked one. You helped others
by posting your query, too.

Don <dwz...[at]telus.net> wrote:
- quote -

Have you heard of a brokerage that, when it went bankrupt, failed in
its fiduciary obligations re buying, selling, and administrating
dividends of a client's stock shares?

On 2009-04-10 11:06:00 -0700, hobnobre[at]webtv.net (H B) said:

- quote -

You should definitely investigate dividend reinvestment plans (DRIPs)
of individual companies if you have not already done so. You are right,
when banks, insurance companies, etc. are no longer certain to survive,
it is reasonable to be cautious about brokerages too. I have always
held ALL my individual stock stock certificates in my very own filing
cabinet and was nervous about keeping them in "street name," even when
people generally believed financial institutions of all types to be
perfectly safe.

On 2009-04-10, H B <hobnobre[at]webtv.net> wrote:
- quote -

If you hold your stocks at a broker who is insured by SIPC, your
account is protected for up to 500,000 dollars.

Also, after buying a stock, you can request a paper stock certificate
to me mailed to your home. Then, you would hold the stock, not the
broker in your name. You can then keep it in a safe place, like a
metal safe at home or a safe deposit box at a bank.

Many people do this for a variety of reasons.

i

Please can someone help with some stupid questions? With so many large
financial institutions in trouble, how do we determine who to trust to
hold our stock? [Am I the only person to hold my own paper stock?]
Would there be any qualms about letting the stock's own company hold my
stock electronically? It would supposedly be accessible by computer- if
I get access to one. Or, in using that same company to sell my stock at
some point? Thanks.