Income Snowball
The Income Snowball is the compounding effect of DRIP reinvestment: new shares purchased through dividends generate their own dividends, which purchase more shares, which generate more dividends. Unlike simple compounding on a fixed principal, the Income Snowball grows from two sources simultaneously — your new capital contributions and your DRIP-generated shares. Over time, the DRIP contribution becomes larger than the new capital contribution. That is when the snowball becomes self-sustaining.
How Prospyr uses it
The Income Snowball Tracker is coming in Phase 2. It will track the split between income generated by your original capital versus income generated by DRIP-reinvested shares — showing the exact moment the snowball tips past 50% DRIP-driven. The DRIP Engine Simulator (available now) models the share growth component of the snowball: how many shares DRIP reinvestment generates per cycle, and how that compounds over your chosen time horizon. The Phase 2 tracker adds the metric that makes the snowball tangible: “You are now 62% DRIP-driven.”
Why this matters for Canadian investors
The Income Snowball is most powerful inside a TFSA, where dividend income and capital gains accumulate with no tax drag at any stage. Every DRIP-reinvested share inside a TFSA generates future dividends that are also fully sheltered — the snowball compounds on the full gross amount, not the after-tax remainder. For RRSP investors, the snowball still compounds tax-free during accumulation, but withdrawals are taxed as income. Placing your highest-growth DRIP positions inside a TFSA is one of the most impactful optimizations available to Canadian income investors.