Hi guys,
As you know, compounding takes time, as the money you’ve already earned on your investments begins to earn returns of its own.
For example, if you put $10,000 into a savings account with a 6% annual interest rate, you’ll have $10,600 after one year. Next year, you’ll be earning 6% on the $10,600 rather than just the original $10,000. That might not seem like a big deal, but the effects can really add up over time. Ten years later, you’d have almost $18,000, 80% more than you started with!
When you reinvest your dividends, you’re combining the power of dividends with the power of compounding to form one mega-force. Here’s why:
You’ll be steadily increasing your holdings of a particular stock over time, setting yourself up for even more dividends down the line.
As various studies have proven, dividend reinvestment is responsible for much of the market’s historical performance.
In fact, asset management company Eaton Vance says as much as 65% of U.S. stock gains have come from reinvested dividends!
Make Dividend Reinvestment Work for You!
To your dividend investing success,
InvestingInDividends.com
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1 Anthony Henderson // Jun 17, 2008 at 2:21 pm
The best place to do dividend reinvestment is jobs that take it out of your check this enables you to lower your taxable income and get in on a share either partial shares that reinvest until they become a full and continue to grow. This is easier because you won’t have to deal with the big minimum shares. I think to companies that do this is Fedex and starbucks.
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