2024-04-22 12:11:08 ET
Summary
- As known, compound interest is the mechanism of earning interest on both the principal amount and the accumulated interests.
- Automatic reinvestment of dividends can passively trigger this mechanism for any security in our income portfolio.
- While I am aware of the benefits of compound interest, I have chosen not to automatically reinvest dividends from my stocks.
- In this article, I explain why I don’t and illustrate the alternative “escape routes” of my personal strategy.
The Magic Square
Twenty years ago I took a trip to Abruzzo, a beautiful region in southern Italy, quiet and secluded, far from the hysteria of mass tourism. I lingered mainly in the area around L’Aquila, later beaten by a tremendous earthquake, to admire its mountains, villages, castles and churches, some of which date back as far as the Lombard era (6th-8th centuries). One in particular, the Abbey of San Pietro ad Oratorium near Capestrano, caught my attention because of a detail present on the facade that I had never seen before: the magic square.
Indeed, a block of stone bears a mysterious engraving, a symbol of medieval mysticism, consisting of a palindromic inscription formed by five superimposed words, obviously capitalized according to the Latin spelling: ROTAS OPERA TENET AREPO SATOR. The magic of this square consists in the fact that the same words can be read both horizontally starting from the first line and vertically from the first column, but also horizontally from right to left starting from the fifth line and vertically from bottom to top starting from the fifth column. If you do a similar read from the other corners, the vertical and horizon lines read the same, thus becoming SATOR AREPO TENET OPERA ROTAS, as it also appears from top to bottom in many other inscriptions....
Read the full article on Seeking Alpha
For further details see:
My 9.5% Income Portfolio - Reinvesting Dividends