Aussie FIRE | Financial Independence Retire Early 51. Investing for growth vs income
13 snips
Nov 7, 2025 Dive into the debate of dividend income versus capital growth! Discover how tax implications and personal preferences shape your investment strategy. Learn about the allure of growth investing and its emotional highs and lows. Dave and Hayden explore practical ways to generate income, whether through dividends or selling shares. They emphasize the importance of diversification and balancing growth with income for financial stability. Get actionable insights to find a strategy that matches your goals and risk tolerance.
AI Snips
Chapters
Transcript
Episode notes
Tax Deferral Powers Compound Growth
- Growth-focused investing defers tax and boosts compounding by keeping returns unrealized until sale.
- That tax deferment plus CGT discounts can materially increase net long-term returns compared with high-income strategies.
Deferred Tax Improves Compounding
- Tax deferment preserves earnings-on-earnings, which mathematically beats paying tax throughout growth periods.
- High earners often prefer growth because losses or lower income reduce taxable events and improve long-term compounding.
CGT Discount Makes Growth More Attractive
- Australia's 50% CGT discount (for >12 months) halves the effective tax on realized gains and makes growth strategies more attractive.
- The CGT discount especially benefits higher-income investors in absolute dollar terms.