We challenge conventional wisdom that retail investors largely consume dividends and rarely reinvest them. Using a German online brokerage dataset, we show that the decision whether to consume or reinvest dividends depends on the structure of an investor’s brokerage account. Brokerage cash serves as a buffer that absorbs dividends, keeps them from being spent and, over the long run, is drawn down when dividends are reinvested. Using independent international survey evidence, we show that an account structure including brokerage cash is the rule, not an exception. Therefore, our results generalize to a large share of the retail investor population.

Little is known about the participation of small individual landlords in the rental market, and about rental income earned by households. Using unique tax filings data from Australia, we show that 20% of middle and retirement age median-income individuals are landlords. This fraction has risen over the last 20 years, increasing by 80% for the retirement age group. We provide evidence linking this change to cuts in interest rates, which have led older individuals to substitute interest income with rental income. Higher participation in the rental market rises individuals’ exposure to local shocks, increases house prices, and lowers rental yields.