HEWISON INSIGHTS
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Dividends
The power of dividends
Simon Curtain
Partner/Private Client Adviser
18 Aug 2014
The Australian sharemarket has actually surpassed its pre-GFC high (late 2007) when the effect of dividends are factored into the scenario.
The graph below shows the overall performance of the Australian share market over the past decade, represented by the blue line. Meanwhile, the red line shows where you as an investor would be if you reinvested your dividends into the share market over the same period.
As you can see, the share market rallied to a high in late 2007, before falling to a low in March 2009. Since then, the market has recovered but is still some 20 per cent off its high. However, after allowing for the reinvestment of dividends (red line), performance it is actually above its 2007-high.
Not everyone is in a position to re-invest dividends, however it shows the power of reinvestment and the compounding of earnings over time.
With annual reporting season in full swing, now is the time to speak to your financial adviser if you would like further information around the reinvestment of dividends.
Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.