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I recently purchased some VDIGX mutual fund. My brokerage told me they allow dividend reinvestment without a fee so I chose to auto roll my dividends back into the fund. After thinking about it though I am curious if I will have an issue or not.

The fund has a subsequent purchase price of $100

What happens if my dividend return is below the subsequent amount?

  • Can someone explain the downvotes? I think this was a pretty straight forward question?? – Anthony Russell Apr 17 '15 at 10:09
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VDIGX, like most Vanguard funds, requires an initial minimum, in this case $3000 for most account types, and then allows fractional share purchases - in this case, with a minimum of $1 for additional investments.

Your brokerage may have a higher minimum ($100, it sounds like). In that case they should hold the additional funds until they reach the subsequent purchase price. However, I find it likely that they would waive that minimum for this kind of plan.

You can see that on their fund overview on the Fees and Minimums tab.

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    +1 but note that even an initial investment in a mutual fund will typically result in the purchase of fractional shares. With most mutual funds and certainly with VDIGX, it is possible to invest directly on the Vanguard website, set up automatic reinvestment of dividends and capital gains etc., and bypass any broker and brokerage minimum transactions, especially if the broker charged a transaction fee for the investment and will charge fees for subsequent re-investment of dividends and capital gains. Vanguard funds generally charge a $20 per account annual fee but the fee is waived ... – Dilip Sarwate Apr 18 '15 at 2:00
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    ... if one chooses to establish electronic interactions through the Vanguard website, sign up for paperless transactions, start an automatic investment plan etc. Yet another reason why handling this investment outside a brokerage might save you some money. – Dilip Sarwate Apr 18 '15 at 2:02
  • Thank you for the info. I had no clue I could do the trade transaction fee free had I just gone to the Vangaurd site. Every fool must learn his lesson I suppose. – Anthony Russell Apr 21 '15 at 19:04

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