Want to see how your money makes money babies, and how those money babies carry on making even more money babies?
Einstein once said
"Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it."
While the concept usually sounds simple enough in theory, in practice it is quiet a hard act to follow in the equities investment world, especially when your own invested capital starts getting mixed up with capital movements, dividends and interest earned.
I have come up with a form of gamification for tracking the dividends your portfolio generates. I hope you find it as useful as I have, and you have fun, should you decide to incorporate it into your investment approach.
Step 1: Choose a share that you will purchase with any dividend or interest you receive from all the shares you own. Ideally, it should be a broad-based share that can easily be held for the long term. ETFs are usually a great choice as they are rules based, stable and can be held for an indefinite period.
Step 2: Set your account to pay dividends/interest into your investment account. Do not set it to automatically reinvest as it will mean re-Investment into the same share that generated the dividend/interest
Step 3: Manually invest all the divvies/interests into your chosen share and repeat as often as you receive dividends, and watch the magic happen.
What I love about this approach is that I know where I allocate my capital, and can track the performance thereof. I also know how much my money babies are and how they are performing. I keep the two separate and track them respectively.
Should I want to make a withdrawal, my money baby shares is where I'll start. It helps knowing that my capital is untouched and still working hard, and I'm enjoying the money babies...
I find this an exciting way to track my portfolio, and hope it will help you as much as it has helped me stay excited about this investing journey.
Kaching Kaching!!!!! 🤑🤑🤑🤑
**15 January 2024 UPDATE
All dividends earned in the ZAR account are transferred to the USD account to purchase $IXUS ETF. All dividends within the USD account are also invested in the same ETF
All dividend within the TFSA are reinvested into $STX
In June 2023, I converted accumulated dividends worth R8 254 into a 5 year fixed government bond, at the record-high rate of 11.75%, to earn R80.82 monthly interest.
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