See how a starting pot and regular contributions grow over time — and exactly what reinvesting your dividends adds versus spending them. Over decades the gap is bigger than almost anyone expects. Free, no signup, monthly compounding.
Returns are before inflation, so these figures are in future pounds, not today's.
Two scenarios, same money, one difference — whether the dividends are reinvested or taken as cash and spent.
FV = start × (1 + r)^years + monthly × [((1 + m)^(12·years) − 1) / m]
The full total return r compounds, because the dividends buy more units that themselves earn returns. m is the equivalent monthly rate, so contributions paid in through the year compound too.
rₛ = r − dividend yield → the pot grows on price alone.
If the dividends are withdrawn and spent, only the price growth compounds. The pot still rises, just more slowly — and the two lines steadily pull apart. On these assumptions, that gap is what reinvesting adds.
Inside a Stocks & Shares ISA or SIPP the reinvested dividends are tax-free. In a taxable account they count as income the year they're paid (2026/27: first £500 free, then 10.75%, 35.75% or 39.35% depending on your band), which reduces what is left to reinvest.
The reinvested line isn't a little higher — it's a different curve. Each reinvested dividend buys units that pay their own dividends, so the effect compounds on compounding. Early on the two paths look almost identical; the gap only becomes dramatic in the final third, which is exactly why starting early and leaving it alone matters more than picking the perfect fund.
Three things move the gap most: time (drag the years slider and watch the final third explode), the dividend yield (a higher-yielding, income-tilted portfolio has more to reinvest), and keeping it sheltered so tax doesn't skim the reinvested dividends each year. For the full picture on wrappers, funds and the honest risks, read the investing guide.