How can I reinvest my profits from shares to apply compound interest to my investing?

Hi Aleksandra,

Compound interest is essentially what happens when you leave your money to grow and ‘compound’ over time.

It happens in two ways…

1- As the investment grows in value (capital growth), you simply hold onto it. Each time it grows, it grows from a higher value which means the dollar gains get larger over time. 10% growth on $1,000 is $100. 10% growth on $2,000 is $200.

2- The second way is by making sure any income you receive you also reinvest back into your investment. You can do this manually or with a ‘dividend reinvestment plan’ which most funds offer.

3- I’ll add a third one here, just because I think it’s important. You can make your overall wealth compound at a faster rate by adding more savings to your investments over time. Rather than sticking with a set monthly amount, try and increase it over time, by finding new ways to save or ways to grow your income.

There’s no other magical ways to benefit from compounding, it’s happening naturally if you do these things over time.

Hope that helps.
Dave

Hi Aleksandra,

To expand on Dave’s second point, we have some features on the platform to help with this.

Apart from opting in for any DRPs at the share registry, you can also reinvest dividends by having it paid into your pearler AU Cash (which is the default preference) and we can automatically transfer it into your Autoinvest Shares Cash account to be included in your next Shares Autoinvest. Simply head to your Settings > Share settings and dividends page and toggle on the following feature:

If you are looking to add a boost to your next Autoinvestment on top of your regular deposits (cash from selling holdings or a bonus from work), you can always transfer any funds in your Autoinvest Shares Cash account and the whole Autoinvest Shares Cash balance will be invested on the next trading day between 10:30 am – 11:00 am according to your chosen investment strategy.

To have external deposits go directly into your Autoinvest Shares Cash account, please include the reference provided during your Autoinvest setup «automateXXXXX» when making the deposit from your own bank.

Hope this helps! :)