How Small Dividends Grow Over Time
On May 16th, the first dividend received was 30 pesos, on May 17th, 7 pesos, and so on. Note that the dividends are small, but at the beginning, obviously, you start with a small amount of dividends, and these dividends have to be reinvested. Obviously, at the beginning, since these dividends are so small, they cannot constitute reinvestment on their own. The capital contribution is very important at the beginning, but over time, as one reinvests each time, that is, saving, investing, and reinvesting these dividends each time, year after year in the future, these dividends will become larger. That's a given. Unless companies want it, but if they have a diversified portfolio, that's not going to happen. So, the beauty, as I was saying, of this type of investment, when we invest in the stock market in general and we are constantly making investments, is that in the long term, your dividends will naturally be larger.
The stock market is a market where financial assets, such as stocks, bonds, and other instruments, are bought and sold. Stocks represent partial ownership of a company and are issued to raise capital. When you buy shares, you become a shareholder and are entitled to a portion of the company's profits and decisions.
Dividends are periodic payments that some companies make to their shareholders as part of their earnings. These payments are often a way to reward investors for their participation in the company and can be a source of passive income.
Financial freedom is a state in which a person has accumulated sufficient financial resources and assets to cover their expenses and enjoy a desired lifestyle without having to rely exclusively on traditional employment. It involves having a sufficient stream of passive income to maintain one's quality of life.
The FIRE (Financial Independence, Retire Early) movement is a financial philosophy that seeks to achieve financial freedom and retire early. It is based on living frugally, saving, and investing wisely to accumulate sufficient wealth and generate passive income to allow one to retire before the traditional retirement age.
Passive income is income generated without you having to be actively involved in an activity. It can come from investments, rents, royalties, dividends, interest, among others. The idea is for this income to flow steadily without requiring your constant time and effort, which contributes to your financial freedom and can be a key goal in the FIRE movement.
In short, the stock market is a market where shares are traded, which represent ownership in companies and can generate dividends as passive income. Financial freedom and the FIRE movement seek to achieve financial independence through the accumulation of passive income, enabling early retirement and a more financially free life.