On a side not @Patrick
You made a good comparison of how one can actually make more money going for growth compared with dividends. But for someone like me I shudder to think that if I go for growth the will eventually come, like when I retire, when I am going to have to start selling those shares to support. What makes me shudder is the fact that I will have a finite amount of shares to sell without ever knowing when I will go through the pearly gates. So it will make me worry (it already does actually) about what if I end up selling everything up much too soon. That is why I like the dividend approach. Maybe it will work out a bit more expensive(ly?) but for me it's like the gift that keeps on giving without me having to chip away at my capital. I reckon if I spend the next 20 years doing as good a job of saving as I am now and investing those savings in solid companies with good dividends, and ALWAYS reinvesting those dividends, then by the time I retire I will be earning a nice tidy sum from those dividends. Couple that with a good pension and I think I will be OK. But at the end of the I guess what is the most important is doing whatever makes you sleep the best at night and the dividends approach makes me sleep better than the growth approach
At the end of the day it's total return that really matters. "If you're earning 10% over inflation, it doesn't matter if you get 2% from dividends, and 8% from growth, or 8% from dividends and 2% from growth. Well it could make a tax difference, but if you build that in then it's the same.
You can't really run out of shares if you withdraw less than the growth, even for an infinite amount of time, as each year you sell less shares for the same money. A quick excel sheet will show you that. Of course you could end up in a situation where you own Berkshire Hathaway which pays no dividends and is valued at $200 000, meaning you might have to sell the last one, but in reality most shares nowadays would split long before they got to that value. Even if that was the case, with unit trusts, and now with easy equities, you could actually sell a fraction of a single share.
Your assumption about being ok after spending 20 years saving as much as you do, with dividends re-invested, and a pension on top of that is wrong. You're not going to be ok, you're more likely going to be very wealthy!
On a side note. Now that I've moved and will continue to move away from my stupid unit trust account into DIVTRX, I'll likely be earning enough in dividends not to need to sell any shares. I never planned it that way, but that's what happens when you stop giving 1.7% to the fund managers every year
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