Where you hold something, and how long, can matter as much as what you hold.
Taxes are a cost you can plan.
The same savings, the same growth. You choose. The other plans the tax.
The same gains, taxed later, keep compounding longer. When you pay is part of the plan.
← Red LinesRed Line 24 of 48 The idea The numbers Where you see it Where it bends This game’s numbersHow strong the proof is Where it comes from
Tax on gains is usually due when you sell. Selling often pays it early, and the money paid can no longer grow. Holding lets it keep growing.
€10,000 at 7% for 20 years with a 26% tax on gains: paid once at the end, about €31,000 is left; paid every year, about €27,500. The same rate, €4,000 apart.
Many EU countries have tax-friendly accounts for saving or retirement, and Italy taxes most gains on shares at 26%, when you sell. Rules differ by country.
Tax rules differ by country and change. Check your own.
Worked out on this page
=Outside the four steps: it follows from the arithmetic
True by the sumsTax taken each year compounds like a fee, and tax put off keeps growing for you. Which account and how long is arithmetic; the rules are your country’s.
- Optimal Asset Location and Allocation with Taxable and Tax-Deferred Investing Robert M. Dammon, Chester S. Spatt & Harold H. Zhang, The Journal of Finance 59(3), 999-1037, 2004
Checked 2 Nov 2026 · How we grade
- A Strong proof: Many good studies or long official data, from different teams or countries, point the same way.
- B Good proof, with limits: Solid studies agree on the direction, but the size varies, or the data covers few places or few kinds of people.
- C Mixed proof: Some good studies for, some against, or the evidence covers only part of the line.
- D Thin proof: Mostly one book’s argument, one survey or stories. It may be wise, but it has not been tested well.
- = True by the sums: It follows from arithmetic, so no study can overturn it. We still show what real data says.
David F. Swensen, Unconventional Success (2005). In our words, not quoted.
See it in numbers: Tax · Tax accounts (From Zero)
Next · Red Line 25Price is not value.Red Line read