Two Couples Example: Power of Compounding Dividends

By NOT reinvesting dividends,

The Coopers' investment value on September 30, 2004 = $61,158

In contrast, by reinvesting dividends,

The Jones' investment value on September 30, 2004 = $196,923

Yep, you read that right, It grew to almost Three times the Cooper's investment, although they only used $56,644 more... (Which DIDN'T come out of their pocket...!) The power of compounding interest over time is clearly the most impressive tool anyone can use in the investing world.