— Investment
Reinvestment Calculator
See what reinvesting your income — dividends, interest, payouts — is worth over time, compared with taking it as cash.
Value created by reinvesting in 20 years
$109,066.28
- Final value with reinvestment
- $329,066.28
- Final value without (income as cash)
- $220,000
- Total income reinvested
- $229,066.28
- Total payouts taken as cash
- $120,000
- Annualized return, reinvested
- 6.14%
- Annualized return, not reinvested
- 4.02%
— Year by year
| Year | Income (taken as cash) | With reinvestment | Without reinvestment |
|---|---|---|---|
| 1 | $6,000 | $106,136.36 | $106,000 |
| 2 | $6,000 | $112,649.26 | $112,000 |
| 3 | $6,000 | $119,561.82 | $118,000 |
| 4 | $6,000 | $126,898.55 | $124,000 |
| 5 | $6,000 | $134,685.5 | $130,000 |
| 6 | $6,000 | $142,950.28 | $136,000 |
| 7 | $6,000 | $151,722.22 | $142,000 |
| 8 | $6,000 | $161,032.43 | $148,000 |
| 9 | $6,000 | $170,913.95 | $154,000 |
| 10 | $6,000 | $181,401.84 | $160,000 |
| 11 | $6,000 | $192,533.3 | $166,000 |
| 12 | $6,000 | $204,347.83 | $172,000 |
| 13 | $6,000 | $216,887.34 | $178,000 |
| 14 | $6,000 | $230,196.31 | $184,000 |
| 15 | $6,000 | $244,321.98 | $190,000 |
| 16 | $6,000 | $259,314.44 | $196,000 |
| 17 | $6,000 | $275,226.9 | $202,000 |
| 18 | $6,000 | $292,115.8 | $208,000 |
| 19 | $6,000 | $310,041.06 | $214,000 |
| 20 | $6,000 | $329,066.28 | $220,000 |
— Reinvested vs taken as cash
Download— How it works
Reinvested: income is added to the balance and compounds. Not reinvested: principal grows by appreciation only, payouts pile up as idle cash.
Reinvesting vs taking the cash
Every income-paying investment forces a choice each time it pays out: spend the money, or put it straight back to work. Reinvesting — automatically, through a dividend reinvestment plan (DRIP), or by rolling over interest — turns each payout into more of the asset, which then earns its own income and appreciation. Taking the cash leaves your principal to grow on its own while the payouts sit idle. This calculator runs both side by side so the gap between them is concrete.
The mechanism is pure compounding: with reinvestment your income earns income, and that snowball is what pulls the two lines on the chart apart. The longer the period and the higher the yield, the more dramatic the divergence.
Worked example — $100,000 at a 6% yield paid quarterly for 20 years, no price growth: Reinvested, it compounds to about $329,000. Taking the income as cash, you keep your $100,000 plus $120,000 of payouts — about $220,000. Reinvesting created roughly $109,000 of extra value from the same investment.
Income, appreciation and tax
Two rates drive the result. The income rate is the yield — a dividend, a coupon, an interest rate — paid out each period. The optional capital appreciation rate is price growth on the principal, on top of the income; for a bond or savings account it is zero, for a stock it might be several percent. Both scenarios get the appreciation; only the reinvested one compounds the income.
Tax matters because you can usually only reinvest what you keep. Enter a tax on payouts and the calculator reinvests the post-tax income, which is the realistic case — and a reminder that a tax-sheltered account lets reinvestment compound untouched.
When reinvested income earns a different rate
By default the calculator assumes you reinvest income back into the same investment, so it earns the same blend of income and appreciation. Sometimes that is not how it works — you might sweep bond coupons into a savings account, or dividends into a different fund. Set a reinvestment return under Advanced options and the reinvested income compounds at that rate instead, in its own pool, while the original principal carries on as before.
You can also add a regular contribution to both scenarios, with an optional yearly step-up, to model reinvesting alongside fresh saving.
— Reader questions
How much difference does reinvesting really make?
Over a long period, a great deal — often the majority of an investment’s total return comes from reinvested income compounding. The higher the yield and the longer the horizon, the wider the gap between reinvesting and taking the cash, because the reinvested payouts earn payouts of their own.
What is a DRIP?
A dividend reinvestment plan automatically uses each dividend to buy more shares of the same investment, often commission-free. It is the simplest way to reinvest, and over decades it can substantially out-grow taking the dividends as cash — which is exactly what this calculator quantifies.
Should I include capital appreciation?
For a stock or fund, yes — its price tends to grow on top of the dividend, so enter an appreciation rate. For a bond held to maturity or a savings account, leave it at zero; the return is essentially all income, and reinvesting it is what makes it compound.
Does tax change the conclusion?
It reduces both outcomes but rarely changes which wins — reinvesting still compounds, just on the post-tax income. The bigger lesson is that reinvesting inside a tax-sheltered account, where payouts are not taxed each year, lets the snowball grow fastest.
What if I reinvest the income somewhere else?
Set a reinvestment return under Advanced options. The reinvested income then compounds at that separate rate — useful if you sweep coupons or dividends into a different instrument rather than buying more of the original.
Is this the same as a compound interest calculator?
It is closely related, but framed around the reinvest-or-take-cash decision: it shows both paths at once and the value reinvesting creates. The Compound Interest calculator is the more general projection tool if you just want a single growing balance.