Originally Posted by
winner69
Somebody mentioned compounding the eighth wonder of the world ...and reinvesting divies boosts returns heaps
Lets say our $1,00m worth of shares grow consistently at 10% pa and we collect a 5% divie along the way and we reinvest that divie into our holding. Essentially assumes earnings will grow at 10% and the divie increases as earnings grow.
At the end of the 10 years we will have about $4.0m (assuming we didn’t spend the divies)
If we had not reinvested our divies we would have $3.4m
Reinvesting the divies gives returns a decent boost eh
No gurantee numbers are right ...indicative only
Also highlights why the NZX50 outperforms the world with divies counted and reinvested
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