It is often easy to ignore how a small amount can make a real difference. However, when you reinvest the dividend amount you receive from your investments, even though they may be a small amount, they can add up to a lot of money over a long period of time.

Why?

It is the power of compound interest. In essence, your money is earning money. It is growing, without you having to do much. And as your money grows, it gets even bigger and bigger over time.

It’s like a plant that gives fruit whose seeds turn into plants and also give fruit.

“Since 1952, the stocks in the S&P 500 have provided a simple return of 7.65% a year. If all dividends were reinvested on a quarterly basis, however, the total return would have jumped (or perhaps vaulted is a better term) to 11.50% a year.*” – Douglas Gerlach