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Reinvest dividends from "summary" of The Automatic Millionaire by David Bach
One of the most powerful wealth-building strategies is to automatically reinvest dividends. When you own stocks or mutual funds that pay dividends, you have the option to take those dividends in cash or automatically reinvest them to buy more shares. By choosing to reinvest dividends, you are essentially compounding your investment over time. This means that as you receive dividends, those earnings are reinvested back into your investment, allowing you to own more shares which can then produce more dividends. The beauty of this strategy lies in the principle of compound interest. As your investment grows with the reinvested dividends, the amount of dividends you receive also increases. This creates a snowball effect where your wealth can grow exponentially over time. It's like planting a seed, nurturing it, and watching it grow into a fruitful tree that keeps producing fruits year after year. By reinvesting dividends, you are harnessing the power of compounding to build your wealth steadily and consistently. It's a simple yet effective way to accelerate the growth of your investments without any additional effort on your part. Instead of spending the dividends you receive, you are putting them to work for you to generate even more wealth in the long run. The key to successfully reinvesting dividends is to set up an automatic reinvestment plan with your brokerage or investment company. This way, you don't have to worry about manually reinvesting dividends each time they are paid out. It's a set-it-and-forget-it approach that ensures your dividends are continuously working for you to grow your investment portfolio.- Reinvesting dividends is a powerful wealth-building strategy that can help you achieve financial independence and grow your net worth over time. By harnessing the power of compounding through reinvesting dividends, you can set yourself on a path towards becoming an automatic millionaire.
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