Dividend Reinvesting: The Money-Making Loop

Stack of coins growing with Dividend Investing

Ever wondered about the secret ingredient behind many investment success stories? While you might imagine it’s full of daring moves and high-stakes risks, the reality might be more straightforward than you think… and that’s a good thing! It means everyone, including you, can master it. Enter the world of Dividend Reinvesting. This isn’t about chasing trendy stocks or riding the wild waves of the market. It’s rooted in discipline, patience, and grasping a simple truth. Dividends are small but mighty.

What’s Dividend Reinvesting? Imagine: A company rewards you with a bonus, known as a “dividend,” simply for owning their stock. Now, what if, instead of just enjoying that bonus, you use it to buy even more of that stock? That’s dividend reinvesting in a nutshell! And the best part? When you’re a Beanstox client, this reinvestment process happens automatically, whether it’s dividends from your S&P 500 tracking ETFs in your free Stocks 500 account, T-Bill income from your free Power Savings ETF account, or various income payments within your personalized Plus Plan Wealth Builder portfolio. Beanstox handles it all, so you don’t have to.

By choosing this route, the “bonus” money you receive can generate its own bonuses, thanks to the additional stocks you buy with the income. And then, those bonuses can be used to buy even more stocks. Imagine a snowball growing as it rolls!

Surprising Fact: Had you invested $10,000 in 1983 and consistently reinvested your dividends over the past 40 years, you’d be looking at a whopping sum of over $652,000! But, if you had cashed out those dividends each time, you’d only have around $258,0001. Quite the difference, right?

Kevin O’Leary’s Insight: Beanstox Co-owner and Chairman, Kevin O’Leary, is a big fan of this approach. He often likens his money to soldiers. In his words, he dispatches them to battle, expecting them to conquer and return with reinforcements. With dividend reinvesting, you’re deploying an ever-increasing army of these financial soldiers!

While “dividend reinvesting” may sound technical, it’s simply a method of allowing your money to work harder for you. Whether you’re a beginner or an experienced investor, it’s a smart strategy to build wealth, made even simpler with Beanstox automating it for you.

1. Source: Beanstox. Bloomberg. S&P 500 Price Return vs Total Return. Data from September 1983 – September 2023. Although it is not possible to invest directly in an index, there are ETFs and funds designed to track the S&P 500 Index. Index performance does not reflect fees applicable for index tracking ETFs (or other funds) or the cost associated with investing. This information assumes the invested funds stay invested throughout the investment period. Performance is provided for illustrative purposes, and it is not indicative of past performance or any Beanstox portfolio or any client’s experience using the Beanstox App. Content is meant for education purposes on the power of compound returns over time, and it is not intended to be taken as advice or a recommendation for any specific investment product or strategy.

Subscribe to Our Blog

Share your email address with us so we can alert you when a new blog post is published. Keep an eye out for personal finance tips, invitations to live events, and more to help you build a bright financial future.

NEW 2023 - Subscribe to Our Blog - Individual article page