Understanding the concept of exponential growth and compound interest is crucial for effective investing. Dividing high-income instruments into CEFs, BDCs, and ETFs helps optimize dividend reinvestment strategies.
Reinvesting dividends can be a discretionary choice, especially for income-oriented investors in their later years. Precise choices should be made before reinvesting funds to avoid suboptimal deployment.
The author chooses not to automatically reinvest dividends, citing reasons such as market volatility and the need for a margin of safety. They prioritize maintaining a balance in their portfolio and using excess liquidity strategically.
By considering long-term growth potential and avoiding emotional decision-making during downturns, investors can navigate market fluctuations more effectively.