One of the underlying principles of The Bedokian Portfolio is in dividends (with bond coupons and bank interests included), which is why the tag line for it is “passive income through dividend and index investing”. Dividends serve as the compounding effect in the early part of portfolio building, and then later as passive income when one is ready to retire.
On a shorter term, dividends can magnify your gains and mitigate your losses. Here’s how.
You May Be Earning More Than You Think
Take for instance the SPDR STI ETF, one of the ETFs that track the Straits Times Index, which is considered to be the proxy for the local equity market. If you had bought 10,000 shares of the ETF on 4 Jan 2010 (the first business day of 2010) at $2.971, and the price of it on 20 Apr 2018 was at $3.572…