When investors consider the benefits of investing in a stock, they usually only consider the basic level of capital appreciation and dividend payouts. After all, this is what is largely covered in the mainstream financial media and what is talked about at the proverbial cocktail parties, with people bragging about their dividend yield or how much their stock just went up.
However, there’s a less common third option that allows investors to compound their capital more effectively while benefiting from a more efficient tax structure. This way isn’t often discussed in the media or social settings, as most investors don’t truly understand its benefits. Stock buybacks are the hidden gem of wealth compounding that Warren Buffett is very fond of in his very own company.
