COMPOUND DIVIDEND CALCULATOR
How to use the Calculator
Initial Investment: This is the initial investment you start with for a certain asset or pool of assets e.g. the 50 stocks in the Fly High Portfolio.
Annual Addition: This is the total annual contribution you make in addition to your initial investment (what you put in outside of any dividend reinvestments)
Number of Years: The number of years you wish to calculate out. NOTE: We will be using DRIP to calculate reinvesting the dividend income back into the overall investment each year (no withdrawals at this point)
Annual Dividend rate: This could be conservative such as just a few % like a high yield savings account would provide ...or use a more aggressive percent such as the 12.64% the current yield that the Fly High Portfolio is producing.
Compounding Frequency per Year: We recommend 4, this would calculate quarterly dividend interest on average.
Compound Dividend Calculator
Dividends are the backbone of earnings for many investors, offering a steady return on investment through regular payments. At Fly High Investing, we focus on the power of dividends to grow wealth. There are two main ways dividends can be accumulated: simple and compound.
In simple terms, simple dividends are straightforward: an investor receives a fixed percentage of the principal amount annually. For instance, if you invest $100,000 at a 10% annual dividend rate, you receive $10,000 each year. Over two years, this would total $20,000 in dividends.
Compound dividends, however, are where the magic happens. Not only do you earn dividends on your initial investment, but also on the dividends previously earned. For example, if you invest $100,000 at a 10% annual rate, by the end of the first year, you have $110,000. In the second year, your 10% is calculated on $110,000, resulting in $11,000 in dividends, totaling $121,000. This compounding effect can significantly enhance returns over time, making it a powerful tool for investors looking to maximize their earnings.
Understanding the nuances of dividend compounding is crucial for any serious investor. By leveraging compound dividends, you can significantly increase your investment's growth potential, ensuring a robust and profitable portfolio. Fly High Investing is here to help you navigate these strategies to optimize your earnings and secure your financial future.
