Q: How is a DRIP for VBAL advantageous for an investment in an RIF? Would it not be beneficial if the market value or the number of units increased rather than the cost base? I don't understand why my financial adviser would set this up. Please help me understand this investment in a registered account. Thank you for your invaluable service.
5i Research Answer:
There are no tax benefits in a registered account from a DRIP, but there is still the benefit of compounding. Over time, the return on VBAL should be decently higher than just having dividend cash sitting in the account. The DRIP allows for small amounts of cash to be continually re-invested with no commission. There is a benefit and the number of units will increase.