Lux Investing

Regarding mutual funds, which is the better option, to invest in growth fund or dividend re-invest fund ?

Public Comments

1. You can do both. Most mutual funds offer the dividend-reinvest feature. It doesn't matter whether they are growth funds, value funds, or other types of funds. If you are choosing your first fund, you might want to consider a Total Stock Market fund. This will give you a share of all types and sizes of companies. If you don't need the income, do invest the dividends.
2. A dividend reinvest fund is not a type of fund, but a type of investment strategy- meaning that any dividends paid are automatically reinvested into the same stock. Growth funds as well as many others are good options and most allow dividend reinvestments- do check out online as much as you can before you invest.
3. You need to learn about mutual funds. Go here: http://finance.yahoo.com/funds/types And this talks about how to do your own investing: www.saveyournestegg.com
4. Funds describing themselves as high dividend funds probably pay a higher dividend than growth funds, but both will allow you to reinvest the dividends.
5. Both options are basically same; dividend reinvested or growth option. Both ways value of your investments will increase either by increasing your units(Through reinvestment) and increase of NAV in the case of growth option.
6. The better option is Dividend funds if you consider tax. As a total of 5 years investment dividend fund will give more gain that growth fund. But if you are short term go for growth fund.
7. i suggest u to invest in growth fund
8. Palash, To get a clear answer, you should know different options available with mutual funds to get profit. 1. Divident Option: Through this option, you can purchase mutual fund units and the mutual fund company will send the profit time to time to its subscribers as DD or cheque. NAV for the dividend option will be less. 2. Growth option: If you select this option, you will not get the dividend time to time from the company. Instead, your unit value will be increased and this can be withdraw when ever you required. Usually, NAV for the growth option will be high. E.g. NAV for Sundaram Select focus growth option is 75 but NAV for divident option is 14. this is because in the first one, the profit adding to the unit and the second one, profit distributing to unite holders, who selected div option, time to time. 3. Dividend Re-investment option or DRIP - In this, the NAV value calculate for dividend option. But instead of getting the dividend cheque, company will purchase additional units using that dividend amount and will add to your total unit. If you select, dividend, DRIP or Growth option, your profit will be same. But, if you don't require money in a period of time, it is better to have growth option. Also, if your investment focus is for long term and your age is less, growth option will be suitable to you with a good fund. If you required money time to time like an income, go for the dividend option. Rest all will be same. Don't go for DRIP. It is not advisable. Hope you understand why I said it is not advisable. Be a conscious investor, monitor your portfolio time to time to find out the losers and avoiding them and add the best performers to get more profit. Happy investing and best of luck.
9. From the returns point of view it is better to invest into Growth fund as when MF declares dividend they have to pay a dividend distribution tax , to that extent net earnings of the MF holder reduces. So ideally growth option is preferred option. From the taxation perspective dividend option is preferred as if your investment is less thatn one year then u do not have to pay any tax on dividend. On growth option u may have to pay short term capital gain if u are investing for less that 1 year.
10. Both option which are describe above is basically a same . In both type dividend is reinvest..& It helps to increase NAV no. If you want more information than visit www.MFexpert.com OR you can also E-mail us at Mfexpert1@yahoo.com