Using a 8% yield as an example ( my personal target minimum yield) then say the purchase price of the stock is $10 and the annual dividend is .80 then — $1,000 divided by the $10 stock price equals 100 shares of the stock purchased. To determine our dividend income we would multiply the 100 shares by .80 = $80 per year or $6.66 per month (I like to express my income in monthly terms because that is how most of us best relates)
But, if you are reinvesting the dividend income then – assuming the share price stays the same for simplicity purposes you would have added an additional 8 shares of the stock.
So the second year you have 108 shares x .80 = $86.40 or $7.20 ! By the time you reach twenty year s you are bringing in over $28.70 per month, $345 per year and you will now own 431 Shares valued at $4,310 dollars!
Now if you wanted to you could bring in $28.70 per month for the rest of your life and still have that $4,310 to pass on to your loved ones.
Now it’s easy to determine what ifs
I did this ten times = $ 287 per month
If I did this 20 times = $ 574 per month
Or .. If I did this 50 times = $ 1,435 per month !
Or even .. 100 times = $ 2,870 per month !
So now that you know the secret start saving and investing $1000 at a time to meet your goals for Income for life! Thinking in terms of small achievements are easier for some of to understand so hopefully this will give you the incentive you may need to get started with your savings.
I hope you enjoyed this article and encourage you to share your thoughts with the author.
