It is more personal preference than anything. Some things to think about
In the old days, it was a nightmare when you had to track everything manually. When I first started DIKing, thank goodness I am a CPA, because I needed it to track the basis with all of those little reinvested dividends of $4.82...
Another perspective is about exiting a position. Many times I will donate something to sell it and not replace it. If you have $4,000 invested, but in December there was a reinvested dividend of $56.82, then you have to donate everything else, and sell that little piece which requires tax return bookkeeping. That is what I was referring to resetting the position with that one lot.
If you made investments during 2018, then stopped and started something else, you would continue to have new lots added with reinvested dividends where you would have a fixed cutoff date without them.
If all you are going to do is buy a single fund and continually make investments, then I probably would not worry about reinvesting. Or, if you are still buying more lots, it probably is OK to reinvest. Probably a mental leftover from the manual days before everything was automated. It is more about "traffic" and minimizing it.
One other thing I remembered based on Saturday night special - they do average on mutual fund shares, so it is easier to not have continual purchases once you are done buying. Buy $5K of one thing, then stop and buy something else (or something very similar as some things are very much alike (e.g., ETF versus a fund).
Not a must due, more of a convenience thing. Hope this makes sense.
This message has been modified
Originally posted on Jan 10, 2019 at 12:58:04pm
Message modified by Acorn on Jan 10, 2019 at 12:59:50pm