We would all like a nice second income to assist us continue when we age, right? I think that the best chance I have is to invest in shares in Great Britain and store them for a long time.

Protecting it in ISA adds a nice bonus because all profits are tax -free when we take money. And the annual limit of 20,000 pounds is more than enough for me. But in the case of investors in various situations, the ISA and SIPP mixture can be beneficial.

It should be remembered that tax treatment depends on the individual circumstances of each client and may change in the future. The content in this article is provided only for information purposes. It is not to be, nor does it constitute any form of tax advice. Readers are responsible for implementing their own diligence and obtaining professional advice before making investment decisions.

Dividend shares

So I utilize ISA. Then, if I want to build income, I should choose dividend shares, right? Finally, my investment in City of London Investment Trust (LSE: Cty) It seems that this year is 4.9% of dividend. And the annual payment has increased from 58 years in a row.

When I want to start accepting an annual income, I expect that I will have almost all my savings based on the income of investment confidants. Until then, I will reinvest cash from dividends in up-to-date actions each year. But it costs me money from broker fees and tax duties every time. And commercial costs can be added up in the years of my long -term plan.

Growth actions

What about the purchase of growth actions that instead do not pay dividends?

Artifical Intelligence (AI) Chip producer Nvidia (Nasdaq: NVDA) is probably currently on the lips of most people. Shocks from the Chinese competition AI and the threat of commercial wars dropped half a trillion dollars from market capitalization. But over the past five years, Nvidia has continued to escalate by 1,875%.

I tried to turn on these two actions in the same price chart above. But when I set it to show a percentage comparison of growth, NVIDIA spectacular climbing means that we can simply see on a flat line for City of London.

Growth versus dividends

There is a different way of thinking about comparing these two. I just made quick calculations. I learned that in order to balance the five -year growth of Nvidia from City of London Dividends, it would take over 60 years at 4.9% per year.

The introduction of 10,000 pounds or half of the ISA benefit at City of London five years ago and reinvesting dividends would now cause about 12,700 pounds. This, in turn, would cause an income of about 620 pounds a year.

The same money in NVIDIA five years ago would escalate today to 197 500 £. This money, transferred to City of London, can cause 9,600 pounds of annual dividends. In this way, we could try to utilize growth supplies to build regular dividend income. But this is clearly associated with a much greater risk.

Total return

As individual investors, we must think about how many years we expect to invest. How well do we understand different types of stocks? How convenient do we have a risk? There are many personal factors. But ultimately one thing determines the size of the pot, which we can build on a specific time scale. This is our total turn, but we get it.