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Reinvest dividends to accelerate growth from "summary" of Investing Basics for Beginners by Razaq Adekunle
When you receive dividends from your investments, you have a choice to make. You can either take the dividends as cash or reinvest them back into the investment. Reinvesting dividends means using the dividends you receive to buy more shares of the same investment. This may not seem like a big deal at first, but it can have a significant impact on the growth of your investment over time. By reinvesting dividends, you are essentially compounding your returns. This means that not only are you earning returns on your original investment, but you are also earning returns on the dividends that have been reinvested. Over time, this can result in exponential growth of your investment. When you reinvest dividends, you are allowing your investment to grow at a faster rate than if you were to simply take the dividends as cash. This is because reinvesting dividends increases the number of shares you own, which in turn increases the amount of dividends you receive in the future. As a result, your investment has the potential to grow more quickly. Reinvesting dividends can be particularly beneficial in the long term. Over time, the impact of compounding returns can be significant. By reinvesting dividends consistently over a long period, you can accelerate the growth of your investment and potentially achieve higher returns than if you were to take the dividends as cash.- Reinvesting dividends can be a powerful strategy for accelerating the growth of your investments. By allowing your returns to compound over time, you can potentially achieve higher returns and build wealth more quickly. So, next time you receive dividends, consider reinvesting them to take advantage of the benefits of compounding returns.
