Hello everybody !!!
In my last blog I took the case of dividend payout by ICICI Bank and how it has increased manifold over 15 years along with the stock appreciating and becoming a multi-bagger.
And drawing data as a point in case ,I could actually show you how patience pays off while staying
invested over a long period of time.
[ See my previous blog for reference- http://investorbodhisattwa.blogspot.in/2016/05/power-of-dividend-fantabulous-example.html )
Albert Einstein had famously said that compounding is the eighth wonder in the world. Had he been an astute investor he would certainly followed the NINTH WONDER in the world!!!
It is a very interesting fact that Einstein ,considered as the greatest scientist ever ,failed miserably when it came to stock market investing!!!
He came out of equity markets severely burnt by the losses!!!
Interesting enough is the fact that IQ DOES NOT GUARANTEE SUCCESS IN SHARE MARKETS!!!
OK , WE HAVE LEARNT FROM EINSTEIN ABOUT FAILURE!!!
NOW LET US LEARN ABOUT THE SUCCESS FROM WARREN BUFFET AND CHARLIE MUNGER!!!
NINTH WONDER???
What is it about?
It is about dividend re-investmernt in the stocks or shares that you have bought.
How does it work???
Ladies and gentleman, let me caution you that there is no gimmick or magician's trick involved!!
The one that is solely responsible ,sorry, you of course , and the other one?- TIME!!!
HERE IT GOES!!
Since we already have the stats ready for ICICI Bank , we shall make judicious use of the same>
TAKE FOR EXAMPLE YOU HELD 100 SHARES OF ICICI BANK FROM 1ST JANUARY 2001.
You bought the shares at the cost of Rs 29.70 a piece.
So your total invested amount would have been 29.7*100= Rs 2970.
1st dividend paid after you bought the share is Rs 2/per share.
You receive 2*100=200 rupees as dividend.
What did you do ?
You bought 200/29.79= 6.713 shares. on 8/5/01
So you have 106.713 shares now.
you received a dividend of Rs 2 as dividend next year on 21/2/02
You received 2*106.713=213.4273 rupees as dividend.
You bought 213.4273 / 25.66=8.3175 shares .
This continues till 4/6/2015.
And you won't simply believe what happens
Here is a simple table for you to understand the Ninth wonder of the world-dividend re-investment!!!
|
DATE
|
TOTAL SHARES IN HAND
|
DIVIDEND
PAID
IN RUPEES
|
PRICE OF SHARE ON THE EX-DIVIDEND DATE
|
TOTAL SHARES BOUGHT WITH DIVIDEND
|
TOTAL SHARES AFTER DIVIDEND RE-INVESTMENT
|
|
08-05-01
|
100
|
2
|
29.79
|
6.713
|
106.713
|
|
21-02-02
|
106.713
|
2
|
25.66
|
8.3175
|
115.0305
|
|
04-08-03
|
115.0305
|
7.5
|
31
|
24.1935
|
139.2240
|
|
02-09-04
|
139.2240
|
7.5
|
52.49
|
19.8929
|
159.1171
|
|
04-08-05
|
159.1171
|
8.5
|
102.66
|
8.2797
|
167.3968
|
|
06-07-06
|
167.3968
|
8.5
|
97.11
|
8.7529
|
176.1497
|
|
14-06-07
|
176.1497
|
10
|
181.17
|
5.5196
|
181.6693
|
|
10-07-08
|
181.6693
|
11
|
123.38
|
8.9155
|
190.5848
|
|
11-06-09
|
190.5848
|
11
|
150.06
|
7.3304
|
197.9152
|
|
10-06-10
|
197.9152
|
12
|
165.81
|
7.2371
|
205.1523
|
|
02-06-11
|
205.1523
|
14
|
209.78
|
6.6736
|
211.8259
|
|
31-05-12
|
211.8259
|
16.5
|
156.65
|
10.533
|
222.3589
|
|
30-05-13
|
222.3589
|
20
|
236.56
|
8.4545
|
230.8134
|
|
05-06-14
|
230.8134
|
23
|
292.63
|
7.8597
|
238.6731
|
|
04-06-15
|
238.6731
|
25
|
290.10
|
8.6177
|
247.2908
|
And all you did was to do nothing!!!! Just invest and wait!!!!
YOUR INITIAL INVESTMENT OF RS 2970 HAS GROWN OVER SEVENTY THOUSAND RUPEES.
THAT IS AN ASTRONOMICAL 2415.4565%
BELIEVE !!! I BELIEVE IN THE NINTH WONDER OF THE WORLD!!!!
No comments:
Post a Comment