Reinvesting dividends can help grow wealth over the long term

The chart below shows the difference in returns of an investment in the MSCI AC World Index where dividends have been reinvested compared to just the change in share price only.

Reinvesting dividends can help grow wealth over the long term

Past performance is not a guide to future performance. The chart is for illustrative purposes only. Investors cannot invest directly in an index. Source: BlackRock, DataStream. Returns shown from index inception 31/12/1990 to 31/08/2012, in US Dollar terms.

"So what do I do with my money?"

It’s no secret that some economies are struggling, but that doesn’t mean all companies are. Consider high-quality companies with strong balance sheets, robust business models, sound company management and attractive growth prospects in fast-growing areas of the world. Many of these companies also pay real and growing dividends, offering investors the flexibility to either draw their income to fund their lifestyle today or reinvest it to grow their total return in the long run.

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