Remember this about dividend reinvesting
Monday, January 4th, 2010Why do people keep posting beautiful graphs of performance when you reinvest dividend stocks versus no reinvestments and then point out the huge difference in return. People almost never mention the fact that when you get dividend and don’t it reinvest in the same stock you still actually have the money you received. Yes, it doesn’t disappear did you know that?
For example, if you have a stock A that pays 5% dividend and you chose to get the dividend in cash and invest the money in another stock. Than you have to calculate the return on the other stock you invested in to get the total return. Keep that in mind the next you read about dividend reinvesting. Getting dividend in cash and waiting for a market correction is not a bad idea either if you think there is a high chance that the market is heading south.
