" Mutual Fund – Growth Vs Dividend Option "

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Mutual Fund – Growth Vs Dividend Option



While buying Mutual Fund, we have options to choose like growth or dividend. We should know about those options, which will make us choose the right one according to our requirements.

Growth option:

  • All money will be invested in this option until redemption.
  • No short term or regular income will be received from the fund before redemption.
  • This option is suitable for long term investment.
  • Wealth creation is high in this option due to power of compounding in long term investment.
  • Long Term Capital Gain is tax-exempted.
  • Growth option is best in Equity Fund for long term.

Dividend option:

  • Short term or regular income in form of dividend will be received from the fund before redemption.
  • This option is suitable for getting regular income for people like senior citizen etc.
  • Wealth creation is moderate in long term in this option due to inefficient power of compounding as compared to growth option.
  • Dividend is tax-exempted in the hands of investor. But Mutual Fund company may have to pay DDT (Dividend Distribution Tax).
  • Long Term Capital Gain is tax-exempted.
  • Dividend option is best in Debt Fund for short term.






Happy Investing !!!
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Comments

  1. Avijit6 December 2017 at 23:12

    can we change the growth to dividend option or vice-versa i'm asking this because i waned to redeem my original investment then go for growth option(in case of one time investment or sip).is it possible?

    ReplyDelete
  2. PRADIP7 December 2017 at 06:02

    You cannot change the option i.e growth/dividend for the amount which is already invested. But you can change it when you are going to buy fresh new investment (Lump sum or SIP) in the same folio. Redemption is not mandatory for fresh investment in lump sum or SIP if you have extra money to invest.

    ReplyDelete
  3. Unknown11 March 2018 at 01:44

    Pradip, write something on fundamental concepts of equity and debt fund and other related funds for investment.

    ReplyDelete
  4. PRADIP11 March 2018 at 04:01

    I have already published different articles on equity mutual fund . You may go through my previous article. I will publish article on your specific question very soon. Stay tuned!

    ReplyDelete
  5. Phani Kumar24 June 2020 at 02:32

    Hey, thanks for the information. your posts are informative and useful. I am regularly following your posts.
    Infosys
    IDFC First Bank
    Container Corporation

    ReplyDelete

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