Investment Trust Dividends

Stick to the plan

Let’s assume u bought the 3 Trusts above, equal weight and

the dividend yield at the time was 7%, it wasn’t but it matters

little.

Your 10k capital has decreased but u have earned £700 in dividends.

In ten years time if nothing changes and u are able to re-invest the dividends at 7%, your capital will have been returned. Your account would be

10k of dividends

plus the value of your Trusts.

As the intention is to never sell the Trusts and to use the dividends for a pension the value of you Trusts matters little to u, maybe more to those wee cats and dogs u are going to leave your capital too but they don’t know that fact.

Now after ten years u still have 7% income from your Trusts.

If the 10k is invested in Dividend Income shares yielding 7% your initial 10k

will be yielding 14%.

The more years u have of re-investing the bigger your Snowball will be.

Your dividends should grow over the ten year period, not included in the calculations and if/when share prices improve, your buying yield will remain the same but your running yield will fall, so u might have the chance to flip your Trusts but that’s another post for another day.

GetRichSlow

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