Dividend reinvestment scheme

grey_gym_sock

Tom99 wrote: »

[FONT=Tahoma, sans-serif]Ok that's great. I have added !!!8220;x = sqrt((0.06)y/2(2)) = sqrt((0.015)y)!!!8221; to my spreadsheet but the answer is coming out as:

[/FONT] !!!8220;[FONT=Tahoma, sans-serif]Geez 20p is 20p!!!8221;

[/FONT] [FONT=Tahoma, sans-serif]What do I do now? Is there a further adjustment I can make to the formula to make it work properly?[/FONT]

[FONT=Tahoma, sans-serif]part of that was showing my working ... the final formula is just:

[/FONT][FONT=Tahoma, sans-serif]sqrt((0.015)y)

having just tried in a spreadsheet, the way to write that seems to be:

=SQRT(0.015*B1)

where B1 is the cell containing your dividends per year

or, to generalize, you could use:

=SQRT(0.5*B1*D1/C1)

where B1 is your dividends per year
and C1 is dealing commission (for halifax, 2)
and D1 is cash drag rate (suggested value: 0.06)
[/FONT]

Tom99

[FONT=Verdana, sans-serif]Another way of looking at whether its worth paying 2% deal fee to reinvest a small dividend is to compare that fee with the Fund fee if that same share was in an ACC tracker.[/FONT]
[FONT=Verdana, sans-serif]So say the share yields 3% then 3% * 2% = 0.06% which is the same as the lowest tracker fund fee.[/FONT]