Hello, everyone,

Today I’m sharing a post I’ve been planning for a while #offtopic from me.

It’s about the question of what the “target amount” for reinvesting my dividends—which I’ve mentioned (especially in my reviews)—actually is.

I want passive cash flow! I want money to practically rain down from the sky—and I want it to happen fully automatically! And this money should also find its way back to the stock market fully automatically. Simply to keep feeding the passive income stream so that it grows bigger and stronger. This should work until one day I’ll use the dividends to cover my living expenses.

But how do I go about this?

To know how much I can reinvest each month under the best-case scenario, I first need to track all my incoming dividends, from which I can then calculate an average value across all monthly dividends. I’ll compare this figure with the previous year’s figures. This comparison allows me to track the growth in my returns and use it to estimate the new calendar year. The estimated monthly return amount for the following calendar year is my planned reinvestment amount.

As I mentioned earlier, I want to set up a fully automated reinvestment system that runs on its own. This also means that manual intervention on my part should not be necessary, even though there may be exceptions.

So the question is: When do I actually need to intervene in the automated reinvestment of my distributions? Of course, this is only the case if the actual distributions I receive from my investments in a given month are lower than my planned reinvestment amount. And for this scenario, I have two aces up my sleeve to ensure that, ideally, I won’t have to intervene at all. First, I set aside distributions from particularly high-yielding months to cover weaker months, so the process can continue. If these reserves aren’t enough, I have a second ace up my sleeve. My current employer contributes half the cost of the Deutschlandticket tax-free. I haven’t factored this bonus into my personal budget planning. This means the money isn’t earmarked to cover expenses. So if there isn’t enough available for the planned reinvestment, I’ll use this very subsidy for that purpose. And in the event that the subsidy isn’t needed, it goes into a reserve for reinvestments.

The system I use isn’t complicated and, fortunately, has already proven itself in practice. Looking back at the first three quarters of 2024, my dividends—except in January and February—were always large enough to ensure that everything ran fully automatically. For those two months, I was able to keep the engine running thanks to the reserve. It’s running like a well-oiled machine. Things are looking good for the current month of October as well. In other words: Not only is the system working, but I could have even planned more optimistically.

The next question is certainly: How do I use my reinvestments—or more precisely, where do I invest my dividends? I follow two strategies for this. On the one hand, I use the distributions to boost the savings plans funded by my net salary for my smaller-volume positions, so that those positions can grow faster. On the other hand, I use a portion of the reinvestments to finance entire savings plans for which I don’t have to draw on my net salary. For me, this applies, for example, to oil stocks such as $XOM (-0.12%) and $CVX (+0.63%) , but also for others like $DLR (+0.62%) and $GSK .

Conclusion: The system works as described and is simple. I just need to check a few days before the savings plans are executed to make sure the settlement accounts have sufficient funds. For the coming year, I can even increase the amount of the planned reinvestments, which makes me very happy. $UPS (-1.89%) and $HTGC (+1.8%) will be included in the savings plans, starting this December. The snowball of passive income is thus growing larger and larger, making me increasingly independent of active earned income. That makes me happy! I couldn’t have imagined something like this back when I was just starting to build my wealth.