This question is often asked in relation to dividend income, but can also apply to interest payments or any other type of investment income, too.
Re-investing any income you receive back into your investments leads to compounding growth over time. Therefore, you are growing both your capital and the returns you receive.
Taking the dividends or interest from your investment portfolio once it is received can lead to a steady stream of income without you having to think much about it, though does not allow for compounding growth.
If you have a longer-term investment horizon and want to maximise the potential for wealth accumulation, it is generally not a good idea to take the income received from your investments.
If you have a shorter-term investment horizon, or perhaps want to invest a lump-sum and immediately receive a steady income, it may well be a good idea to take the income received from your investments.
The decision comes down to very personal circumstances, including not only your time horizon, but also your life plan, investment goals, tax implications, risk tolerance, potential costs, and much more.
For a personalised answer, please submit your own question through Ask the Experts.
Please note that all content within this response has been prepared for information purposes only. This response does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.