The power of reinvesting dividends



  • Morning traders,

    I'm new to FI but have been investing stocks for a long time and wanted to share an amazing concept and give you an actual representation of how important it is to reinvest your dividends. Below I have provided an example of the difference of reinvesting dividends using Paul Pogba over the course of 12 months.

    0_1587024956296_Screenshot 2020-04-15 at 16.25.58.png

    The above graph shows that if you were to invest in 156 Pogba's in which he was priced at £7.80 when the data started. The reason for purchasing 156 Pogba's is that the first dividend of £0.05 would allow you to purchase 1 more Pogba the next day (156 x £0.05 = £7.80).

    The table shows how much you'd receive in dividends each month. As the table shows by reinvesting your dividends in 12 months time you would be receiving a gigantic 30.94% more dividends each month compared to if you didn't reinvest the dividends.

    I'm sure everybody is already aware of the power of compound interest but I wanted to a share a visual representation to everybody to show just how powerful this strategy is. If you were to do this over 3 years then of course the dividends would compound even more.

    If you like this kind of stuff I've just started a Twitter account at @FIStoxxy so give me a follow as I'll be posting similar stuff in time to come.

    Any questions on compound interest give me a shout!

    Regards,
    Nathan



  • @NewUser517869 said in The power of reinvesting dividends:

    ke this kind of stuff I've just started a Twitter account at @FIStoxxy so give me a

    I love to see S**t like this- nice work


  • Banned

    I have given you a follow, see how it goes

    gl



  • @pompeyjosh1990 thanks for taking the time to read Josh!



  • @MrWh1te awesome times! Thank you



  • As someone who doesn't reinvest my dividends (I take them out as a kind of extra income), this is incredibly persuasive. A very nice table.

    Definitely I've lost out with my methods, but then again maybe I wouldn't have put as much in if I didnt do that.



  • @FI-Stoxxy Fantastic work OP 👏🏻

    It’s great to see a real life visual representation of how the 8th wonder of the world works, and I’m happy to say I’ve been one of those people reinvesting my pogba dividends into more pogbas.

    This should help give an insight into how important compounding is.



  • Excellent work well done and thank you



  • @FI-Stoxxy I've followed u as well, this is good data well presented and I like the little write up o your profile as well 👍



  • @FI-Stoxxy

    Nice table and nice idea. I always reinvest dividends, but not usually into my premium dividend winners. Dividends usually go into higher risk but cheaper trades.

    Best compound interest for me was 7 days of Pogba dividends into 1,000 Marc-Oliver Kempf for £273, then IS next day for £500, minus £10 commission and returned 78% on Pogba dividends in 8 days or less.

    Other dividends used to buy new holds or top up on existing holds. Compound interest matters!!



  • @Martyn-B yeh I do same.. Premiums are cash cows that give me stake in ipd flips. Its like Pogba was my Genghis Khan and 16 months later he's 'fathered' a 1000+ trades from my portfolio... And every hold I've ever had since is from that lineage 😂



  • @Vespasian32 Funnily enough I call them Pogba's little bastards!! Messi has a few fair few too...



  • @FI-Stoxxy I know this is a theoretical example you have given but also worth bearing in mind that premium players are usually at a peak in price when returning dividends.

    Reinvesting dividends in the winners the next day will probably return less compound interest than holding a cash balance for 3 days to a week and then reinvesting?



  • @Martyn-B Hi Martyn.

    That is a really important point that is worth discussing. In the above example I had changed the price of Pogba which reflected the difference in his price throughout the season. In some cases you buy at a premium but in other cases you buy at a fantastic discount.



  • @FI-Stoxxy Many reinvest dividends. It's free cash without having to sell and pay the commission! Nice seeing it in a table. I have reinvested mine in topping up premium holds, but mostly use them to buy cheaper players in the last few weeks for MB (Ighalo, Rooney, Niguez).



  • @Londoner I agree, almost everybody will be doing this already. I mean if you receive £10.00 in dividends in what situation would you immediately withdraw those funds. It is nice to see a visual representation of what it looks like. I've done this with my stocks for years, only thing is I've never seen compounding so effective in any platform like Football Index. If companies gave 20+% dividends they'd run out of money very quickly



  • @Martyn-B i also try to do this but during this period of uncertainty i havent reinvested anything yet



  • @Black-wolf I am still reinvesting dividends. Current MB dividends going into cheap PB players, this week De Roon and Hateboer and occasionally fat Hazard if I have a particularly good day (buy in blocks of 10 minimum).

    Good time to buy unless you might need the cash, PB bargains galore plus a 8.25% bonus.



  • @Martyn-B i dont need the cash either but im always a worst case scenario kind of guy so i dont want to be forced to IS players at current spreads if the worst were to happen, although im 99.9% sure me and my wifes jobs are completely safe. I always worry about that 0.1% so saving up all those dividends until i have a date for returning to work. Im not withdrawing them either its just incase


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