Since writing about FIRE in 2009, I’ve favored investing in growth stocks over value stocks. As someone who wanted to retire early from finance, my goal was to build as large a capital base as quickly as possible. Once I retired, I could convert these gains into dividend-paying stocks or other income-generating assets to cover my living expenses if so desired.

Although more volatile, you’ll likely generate more wealth faster by investing in growth stocks. By definition, growth stocks are expanding at a rate above average, which means shareholder equity also tends to compound faster. As equity investors, that’s exactly what we want. Instead of receiving a small dividend, I’d rather have the company reinvest capital into high-return opportunities.

Once a company starts paying a dividend or hikes its payout ratio, it’s signaling it can’t find better uses for its capital. If it could generate a higher return internally—say,