What is the growth and dividend option in this mutual fund, which option will be right for you

 

If you are planning to invest in mutual funds, then it is very important to know about this scheme beforehand. Because before investing in the scheme you should decide which option you should choose to benefit from the scheme. Investors get two types of options in mutual funds. The first is growth and the second is dividend payout (dividend). While the money in the growth option remains in the scheme continuously, in the dividend option, companies periodically distribute the benefit in the form of a dividend to the beneficiary. Let us tell you about them.

 

What is the growth option? Choosing this option means that you do not get the dividend (dividend) you get on your scheme. You will get this benefit only when you redeem your units. That is, sell them. The advantage of this is that your investment in this option keeps increasing.

 

Understand this from this example. For example, if you bought 10000 units of a mutual fund at the rate of NAV of Rs. 10 and you sold it after two years at NAV of Rs. 15, then your return on this investment was Rs. 50,000. That is, you will get the benefit of 50,000 rupees.

 

Who should choose this option? This option is suitable for long-term investors. Because it does not have to pay tax on capital gains repeatedly on returns. Also, when you choose a growth option, long term returns increase due to not withdrawing money in between. In this, the investor also gets the benefit of compounding. Therefore, this option is suitable for investors who do not want regular income on their investments. Investors who want a higher return on money should opt for a growth option.

 

What is the dividend payout option? In the dividend option, the mutual fund house pays the dividend from time to time to the investor. It is up to the mutual fund house when and how much it benefits its shareholders.

 

For whom is this option right? This option is suitable for investors who want to invest in mutual fund schemes for a short period. Apart from this, this option is right for those who need regular income. However, in this scheme, the value of your money increases less than the growth option. Because in this you do not get the benefit of compounding as much as you get on choosing a growth option.

 

When do you get a dividend? The dividend of investment is given when the companies benefit and wants to distribute their profits to their investors. There is no time or rule as to when and how much will be given. It is up to the company when and how much it benefits its shareholders.

 

The option of re-investment is also available in dividend option. In dividend, the investor also gets the option of dividend re-investment. In this, the investor gets the benefit of both growth and dividend. The dividend amount does not go into the investor's pocket. Units are allotted to the investor in return.