FirstStepsInvesting

Decoder · How growth works

Dividend

A payment some companies make to their shareholders out of profits, usually in cash, on a schedule. Inside a fund, dividends from all the held companies pool together. Dividends are a slice of return, not free money — the price of the holding typically adjusts by a like amount when a dividend is paid.

For your first $100: You do not need to hunt dividends with your first $100. A broad fund collects whatever its companies pay, automatically.

Return, in plain wordsCompound growth, in plain wordsDollar-cost averaging, in plain words

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