If you look at the chart of CTY, the long term direction is up, with inflation it will always be so. The market downturns are shown, which you have to sit thru. Better if you can add cash to the Snowball but for this example it’s only the earned dividends that are re-invested.

Looking at the chart and especially during the covid crash, you will see the share price follows the NAV of its constituent holdings. Whilst unpleasant, out of adversity comes opportunity.

Trading tip: watch the NAV not the price.

You decide to stick to your plan and simply trade the adversity and re-invest your dividends, therefore earning more dividends every year to either re-invest or to use in your retirement.

When the price is high and therefore the yield is lower, you could re-invest the dividends in the higher yielding shares in your Snowball.

The example share used is CTY which is a Dividend Hero and therefore one of the safest shares in the Investment Trust universe. CTY has reserves to pay their dividends in times of extreme market stress, which they have had to use three times in their long history but no dividend is entirely ‘safe’.