Hey Friend, 

 

Last week I received a message from a reader.

 

I’ve shortened it slightly, but the essence was this:

 

They’ve recently started investing, built their portfolio to just under $10k, and are consistently putting away around 10% of their income. They described their approach as long-term, mechanical and unemotional.

 

But after learning about capital gains tax, they’ve started to question whether it’s even worth it.

 

Their example was simple.

 

If they turn $10k into $20k and sell, they could lose a significant portion of the profit to tax.

 

And from there, the question becomes, “What’s the most efficient way to minimise that?” or even more broadly, “Is investing actually worth it if it’s taxed like this?”

 

Before I get into it, a quick note.

 

I’m not an accountant or a licensed financial advisor, so I can’t tell you what to do with your money.

 

But as a financial coach, I don’t really focus on specific investments anyway. 

 

My work is centred around how people think and behave with money, because in my experience, that’s what ultimately determines whether someone builds wealth or not.

 

And this is a good example of that.

 

First, I want to acknowledge what this person is doing well.

 

They’ve started, which is already a hurdle for most people. They’ve built some momentum, they’re investing consistently, and they’re thinking beyond the short term. That combination is far more important than picking the perfect investment early on.

 

At the same time, there’s a tension in what they’ve said.

 

They describe their approach as long-term and unemotional, but the question itself is coming from a place of uncertainty about the outcome.

 

That’s not a criticism, it’s just the reality of being early in the process. When you’re still building confidence and experience, it’s very easy for new information, like tax, to pull your thinking back into the short term.

 

That gap between intention and behaviour is where most people get tripped up.

 

On the tax side of things, it’s worth getting clear on the basics.

 

 

If you hold that asset for more than 12 months, you generally receive a 50% discount on the taxable gain (based on the current rules, which could be changing soon…)

 

Using their example, a $10k investment growing to $20k creates a $10k gain, but only $5k of that would be taxable if the asset was held long enough.

 

That’s an important detail, but it’s not really the core issue here.

 

The more important question sitting underneath all of this is whether investing is worthwhile if you have to pay tax on the gains.

 

And I think that question comes from focusing too far ahead.

 

If you’re early in your investing journey, you’re in the phase of building your asset base.

 

You’re not in the phase of optimising tax outcomes or thinking about exits. Jumping to those questions too early can distract you from what actually matters at this stage, which is consistency and accumulation.

 

In practical terms, that means continuing to invest, continuing to build, and not interrupting the process unnecessarily.

 

This is also why I have a simple rule for myself.

 

 

That time horizon removes a lot of the noise, including short-term tax concerns, and keeps the focus on long-term compounding.

 

There’s also a broader perspective that’s worth keeping in mind.

 

Saying that investing isn’t worthwhile because of tax is similar to saying that earning more income isn’t worthwhile because you’ll pay more tax.

 

It feels logical on the surface, but it ignores the fact that you’re still better off after the tax is paid.

 

 

Income doesn’t work like that, it’s taxed as it’s earned. With investments, you have a degree of control over when those gains are realised.

 

To give you a personal example,

 

I’ve held one position for close to 10 years that is now up over $340,000.

 

I haven’t sold any of it, which means I haven’t paid any tax on that growth during that time (aside from some income tax on dividends).

 

If I chose to sell today, roughly half of that gain would be taxable under the current rules, so around $170,000 would be added to my income for that year. 

 

Depending on my marginal tax rate, that could mean somewhere in the vicinity of $75,000 to $85,000 in tax.

 

Even after paying that, I’d still be left with approximately $255,000 in profit.

 

Considering I’ve invested around $85,000 of my own money over that period, the outcome is still significantly positive.

 

That’s the part that often gets overlooked.

 

Early on, tax can feel like something that reduces the value of what you’re building. Over time, you start to see it differently. It becomes a by-product of successful investing, not a reason to avoid it.

 

The bigger risks are usually elsewhere.

 

 

That’s how I’d think about it.

Have a great day,