Friday, June 18, 2010

Newtons Laws of Dividends

Newton related Distance, Velocity and Acceleration with each other to revolutionize the physics of the time.

I was putting together some spread sheets to track my dividend portfolio's. I wanted to make a column to show me the monthly increase in dividends. since more shares get added through the DRIP and new funds. when I realized the parallels that exist between newtons laws and dividends.

Distance is your Net Worth.
Velocity is your Dividend Income.
Acceleration is the change in your Dividend Income.

Adding more shares to a portfolio increases the Acceleration. not only is the Velocity increased once, it is continuously increased as dividend income gets reinvested.

Then add Time into the equations as The sooner you start your investment trip the larger the distance travelled.

Then I went further to add a column to calculate the monthly change in Acceleration. ( the change in the change of Dividend Income) This was the most interesting column. It shows how fast you are increasing your Acceleration. I'm going to polish up this spread sheet and post it.

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