Investing in stocks: reinvest your dividends

If you read the article the rules of stockmarket investing you'll see that the first suggestion is to do good research on a company and write down why you think it will go up in price, adding some rigour to your approach.

Another suggestion is to take your time and not be in a rush to make a great return. Although there has been a lot of volatility in recent years with some prices moving huge percentages overnight, traditionally there have also been long periods where a stocks price may not have moved in a year as much as it might have done in a week of late!

So don't be in a huge rush for returns - take your time. And when you get dividends on your shares as a longer term investor, it is a good idea to use those dividends to buy more shares in the company rather than to take it out and have it sit languishing in your cash account linked to your share trading account that gets no interest.

To see this point hammered home, there are several charts that show you mathematically with all sorts of investments how powerful reinvesting dividends is, and how that can greatly grow your return over a period of years than taking the dividends out.

Another benefit of not doing lots of trades is also the simple fact that you incur less in charges, and you are not encouraged into potentially dangerous short termist thinking, that can encourage you to want to buy and sell on a frequent basis, which can lead to taking more risks in order to pursue a fast buck because companies whose share price is quite volatile is inherently also quite risky as it could fall quickly just as likely as it is to rise quickly.

Buying Property

Mortgages

Buying Overseas

Tools and Resources

Investing in stocks: reinvest your dividends

House Prices