Our Family's Savings Story 41

Our Family's Savings Story 41

Let's consider the dividend growth rate

Realizing that we need 25 million yen in assets for a small FIRE with dividends, we feel a little discouraged by the difficulty of reaching our goal.

"25 million, when will we achieve it? Are we already old folks?"

"..."

"Pensions can't be relied upon, the amount we get can be reduced. Feeling a bit down..."

"..."

"Hey, you! Don't just stay quiet, say something!"

"...You forgot about the dividend growth rate."

"What is the dividend growth rate? Does it mean the dividends increase?"

"Yeah, should we simulate the dividend growth rate?"

【What is the dividend growth rate?】It is a numerical value that represents how much the dividends have increased from the previous year's dividends. For example, if it was 100 yen per share last year and 108 yen per share this year, the dividend growth rate would be 8%.

【Dividend Growth Rate Simulation】Our main stock, the global ETF VT, has a dividend yield of 2% and an average dividend growth rate of about 6.5% over the past 5 years.

Let's simulate the dividend growth rate with a conservative estimate of 5%. Assuming an initial dividend of 0.12 million yen, it would be 0.144 million yen after 5 years, 18.6 million yen after 10 years, 0.24 million yen after 15 years, and 0.306 million yen after 20 years.

※Tax on dividends is not taken into consideration.

※Assuming there is no additional investment.

"Wow, increasing dividends is amazing! Even without reinvestment, it will double in 15 years."

"Well, there are cases where dividends are not increased, and there are cases where they decrease. It's just a simulation after all, isn't it?"

"Apart from the unavoidable situation during the COVID shock, are the dividends increasing steadily? I'm starting to feel hopeful. Speaking of an increase in dividends, that's the high dividend concept for the future."

"An increase in dividends as the high dividend concept for the future, that's a good phrase. Since you can calculate the growth rate using Excel to compile the dividends, I'll check it every year."

"I'm counting on you."

"Got it!!"

Our household savings continue to grow.