Quote:
Originally Posted by Chad-1stGen
For others reading along. If buy two investments. Investment A for $100 and investment B for $100. Investment A stock prices grows 5% a year and pays a dividend of 5% a year that you reinvest for 10% total returns per year. Investment B doesn't pay a dividend but grows 10% a year so that both investment's A and B total return is equal. You pay zero taxes on investment B until you sell and currently that would be taxed at a lower rate than ordinary income taxes. Investment A would trigger taxes every year and at the end when you sold (if you sold) your return after taxes would be less.
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That sounds GREAT --- tell me which stocks you're going to guarantee me are going to go up. Because that is the MAJOR difference in dividend investing and investing in pure capital growth. Most people can not pick which stocks are going to rise. And with that comes RISK... Dividend investing -- in the kind of names we've been discussing - have a history - AND pay that dividend. What that can do for you is cushions and comforts during the downturns and creates income for reinvestment.
TAXES are a whole different discussion... and unless someone is a "seer" you can't predict what our infamous bozos in Congress will or won't do.... TAXES and their scenarios need to be discussed with a CPA on an individual basis. What my tax situation is, will be far different than someone else's.