Growth vs Dividend Option in Mutual Funds | Mutual Funds with Growth Option or Dividend Option

What are the options in Mutual Funds?
1. Growth
2. Dividend, Dividend Reinvestment

Which one is the #bestoption among them?
In one scheme there are three options but nav is different
1. Growth:
a. There is no pay-out in between the scheme, profit is buying price – selling price.
b. Note: At the time of selling, One must take care of the Long Term Capital Gain and #ShortTermCapitalGain.
2. Dividend Option:
a. There are pay-outs till the time you have invested in the scheme but the time of dividend declaration and amount of dividend is not fixed.
b. Dividend also invites tax we also call it dividend distribution tax.
c. At the time of dividend declaration, NAV also comes down.
3. #Dividend Reinvestment:
a. Reinvesting the dividend given by Mutual Fund.
b. Benefit: you can buy units at a lower price. If you have opted for dividend #reinvestment.

Recommendation:
– Till the time you don’t want regular income you stay with growth option it also helps you in saving the tax.
– In dividend option, you can think of regular income but it’s not regular because you don’t have the exact date and time on which the dividend is declared.

Posted on August 18, 2022 by S T
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