Tax effective Investing ( Not short term trading )Involves not...

Tax effective Investing ( Not short term trading )

Involves not realizing unnecessary gains
and probably using debt to diversify a portfolio


eg you bought 10,000 WPL at $8

They are Now worth $40+

So that is some capital gain
OK Why sell ??

Sell enough to prepay so may years interest
and with the borrowed funds diversify and build the portfolio

In one year sell enough WPL to prepay another years
interest..

Interest paid ( tax deduction ) = realized capital gain

Assuming you have other taxable income
Then you have not added to your tax liability

You have accessed the value in WPL
You have prepaid interest minimizing debt risk
You have diversified the portfolio
maybe even earning franked dividends

Is this the road to real wealth ??

So Tax effective investing probably involves debt..

And good planning ...

If your are an investor and building portfolio
Why sell anything that has a capital gain
Just use the asset as security

With the borrowing diversify..

Good stock selection means never ever selling


motorway