Simulate and project the evolution of your wealth and the generation of monthly passive income through the receipt of dividends from stocks and Real Estate Investment Trusts. Discover the power of the snowball effect by reinvesting your dividends.
| Year | Total Contributed | Accum. Wealth | Annual Dividends | Est. Monthly Income |
|---|
Dividends are installments of profits from companies distributed to shareholders, or earnings generated by rental properties distributed monthly to Real Estate Investment Trusts (REITs) to shareholders. Currently, dividends from stocks and earnings from REITs on the stock exchange are tax-exempt.
When receiving dividends, the smart investor does not consume these resources; instead, they use them to purchase more units/shares of funds or more stocks from the same company. The following month, the greater wealth generates even more dividends, which in turn purchase more assets. Over time, the installment of dividends received surpasses the investor's own monthly contribution. This turning point is known as the "Tipping Point" or the home of the exponential effect of the snowball effect.
The Dividend Yield is the relationship between the dividends paid by a company/fund over the last 12 months and the current price of its units/shares or stocks. It is expressed as a percentage. For example: if a REIT costs $100.00 per unit/share and paid $10.00 in dividends per unit/share in the last year, its Dividend Yield is 10.00%. It indicates the return rate generated purely by the flow of dividends received.
REITs have massive advantages over physical properties: (1) tax exemption on rental income received (physical property rental pays up to 27.5% of income tax), (2) immediate liquidity (you can sell your units/shares on the stock exchange in seconds), (3) diversification (with $100, you invest in portfolios containing dozens of logistics warehouses or corporate office buildings), and (4) absence of costs related to default/delinquency, real estate agent commissions, and physical maintenance of facades/structures.
In addition to the monthly distribution of interest or dividends (Dividend Yield), the units/shares of REITs or the market value of stocks tend to follow inflation or grow in the long term due to adjustments in rental contract prices or products sold by companies. This simulation adds this annual growth of units/shares to the total wealth to project a realistic and complete result.