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Accounting fees for dividend reinvesting

Discussion in 'General Investing Discussion' started by braddo2, 21st May, 2011.

  1. braddo2

    braddo2 New Member

    Joined:
    21st May, 2011
    Posts:
    2
    Location:
    Brisbane
    Hi,

    I'm new to investing and have been buying small packets across various stock just to get my feet wet. I thought automatically reinvesting the dividends would be the wise thing to do but was shocked when I received my accountants bill.

    They explained that reinvesting adds a lot more complexity to the accounting process and long story short I spent more money paying their bill than I got out of the shares.

    Is that a fair statement on their behalf, or is my accountant having a lend of me? Admittedly the amounts invested are only small, but you've got to start somewhere.

    How do I stop the re-investment now if I choose to? Is that controlled by my CHESS sponsor?

    Your help is appreciated.
     
  2. Waimate01

    Waimate01 Well-Known Member

    Joined:
    26th May, 2008
    Posts:
    157
    Location:
    Sydney
    You control your re-investment options by going to the website of the investment and looking for an option like "shareholder services". That will typically take you to either Compuershare or Link Market Services where you can either set up a free account, or usually just access your holdings using your HIN ("X00....").

    I have heard of accountants charging absurd amounts for totting up DRPs. It's not a lot of work and you can do most of this yourself. Just maintain a simple ledger for each investment showing the date of the dividend, franked and unfranked amount, franking credit, number of shares allocated in the DRP and the price of each share (or cash amount if no DRP). All this data is on your dividend statement. Make sure your ledger is accurate and up to date, and give that to your accountant instead of the shoebox full of dividend statements.

    The DRP details only really matter when you come to sell a share, so as long as you're collecting the info, it creates ZERO extra work for your accountant until you sell down.

    It's really a simple enough thing. I think some accountants use DRP as a justification for their fees, which I don't think is a great idea because then when someone does start collating their own DRP, the accountant either has to lower his fees or come up with a new justification which starts to look a bit contrived.
     
  3. braddo2

    braddo2 New Member

    Joined:
    21st May, 2011
    Posts:
    2
    Location:
    Brisbane
    Thanks for your response. Very helpful.