The detailed question was:
I have read your book and have found it most useful. However there is no mention of income tax. In my case I watch the income tax implications of all disposals before I take any action. Do you consider that all income tax implications should be ignored?
There are several reasons why I did not mention tax in the book:
- I am neither licensed nor qualified to discuss taxation issues. I prefer to stick to things where I think I have real knowledge or experience.
- The taxation situation of every reader will be different and there are so many possibilities, it would have complicated things enormously. You will notice that
- I expressed my returns on a pre-tax basis. It is then up to each reader to apply that to their tax situation
There is one policy that I have, though, that I did not spell out in the book. That is to set a strategy on taxation before starting investing. So, we should decide what we want to be doing from a tax point of view and structure the way we invest to meet taxation imperatives. Thereafter I think it is wise to keep taxation out of investment decisions. It is difficult enough to make good decisions without complicating them with taxation issues.
However, I would like to stress that this is my point of view and it is eminently arguable. There is room for many different approaches to this question. The aim of my book was to provide a model of an investment plan and show how it might be implemented in practice. The aim of supplying and explaining the model is to assist you in developing your own plan, which will necessarily be different to mine. There is absolutely no reason why you might not bring taxation into your investment plan. My feeling is that it will complicate things, as I explained. However, there is scope to maybe fix some other aspects of the plan that are decision points for me, but will be given for you the way tax is for me. The key think is to try to understand the full implications of your plan. This takes time, and experience.