Start with the same $10,000
This example assumes a constant 5% annual income rate, no contributions, no tax or fees, and no change in investment prices. Reinvestment happens once at the end of each year. It is a simplified model, not a market forecast.
| Measure | Take cash | Reinvest annually |
|---|---|---|
| Starting balance | $10,000 | $10,000 |
| Ending invested balance | $10,000 | $16,288.95 |
| Cash withdrawn over 10 years | $5,000 | $0 |
| Next-year annual income at 5% | $500 | $814.45 |
With annual reinvestment, ending balance = $10,000 × 1.05¹⁰. In the cash scenario, the $5,000 withdrawn is separate from the invested balance. If you retain that cash, include it when comparing total assets. If you spend it, it has funded expenses.
Reproduce the example in the calculator
- Open the income calculator and choose Advanced mode.
- Enter investment 10,000, annual yield 5%, and a 10-year horizon.
- Set dividend growth to 0, annual contributions to 0, and tax to 0.
- Turn on the year-by-year table. Compare DRIP off with DRIP on.
The calculator reinvests annually in this model. Selecting monthly or quarterly payout frequency changes the per-payment estimate; it does not switch the advanced model to monthly or quarterly compounding.
Understand the growth input
The current model increases the income rate applied to the balance each year. It does not model individual shares, changing prices, or a fund’s actual dividend-per-share history. Set growth to zero for the simple comparison above. A positive assumption can produce optimistic projections over long periods.
Separate income earned from cash available
A reinvested payment is still income in your records, but the same money is used to purchase investments. Do not count it again as cash available for rent or groceries. A tracker should show gross income, amounts reinvested, and cash retained separately.
What this example leaves out
Actual distributions and prices can change. Taxes, fees, foreign exchange and reinvestment timing can alter results. This comparison does not establish that either choice will perform better in a real portfolio.
Continue planning
Compare income at different starting balances or learn how payment schedules affect monthly budgeting.
Track your actual cash flow
After estimating income, open WealthFlow to track income and expenses. Keep projected payments separate from money actually received. Check the app’s storage notice before entering personal information.
More income planning tools
Explore CountYield or return to the dividend calculator.
Educational estimates only. No individual investment or tax recommendation. Distributions and investment values can change.