What is the difference between a Dividend and Growth for a Mutual fund, and which is better?

Question

What is the difference between a Dividend and Growth for a Mutual fund, and which is better? What the + and -ve points?

Answer 1

Dividend is interest earned on your money.
growth is just that growth.
I don't know what the points mean

Answer 2

Dividend is given by company on the shares. Growth for a Mutual fund means the total fund value grows depending upon the share value. On growth of fund mutual funds also give dividend.

Answer 3

In the dividend option of mutual funds, the dividend is paid as and when declared. In growth option, such dividend declared is not paid out, but added back to the principal for further investment and accordingly additional units are issued. The growth scheme provides the benefit of compounding and thus the yield will be better. The negative point is that the dividend declared is invested in the same fund thus prohibiting alternate avenues of investment. In dividend scheme, there is no compounding effect but choices are available to invest the dividend elsewhere for better returns.

Answer 4

In the Dividend option, periodically the dividend is paid to the mutual account holder. Whereas in the Growth option the periodical dividend is added to the NAV of the member so it is added to the mutual fund account.

Answer 5

A dividend fund pays out dividend regularly,a growth fund instead uses that money to further grow the asset value. There is no simple answer as to which is better.It depends on your needs and whether you have better ways of investing part of it later.If you want to reduce risk on the investment,you can opt for dividend and use the dividend money for investing elsewhere.Otherwise,you may want income every year for example.In that case too you can opt for dividend.However,if you feel the investment is good for long term ,then opt for growth.Tax implications are the same for both if held for more than 1 year.

Answer 6

Growth funds invest in companies with high growth prospects irrespective of the dividends they pay, which are usually very small. Dividend funds invest in companies paying good dividends and growth is a secondary aim.

In practice overall performance over the long period, has been similar, and I would go for income myself.

Answer 7

Dividend paid on Equity Share by A listed Company . But Mutual fund is just like Long term debt where co. paid Interest. Both are good & bad depend on market portfiolio. if Profit making Co. share then it may be decleared good dividend. hence Risk is more on dividend.

Answer 8

The fund management of both the fund is same. Dividend is just the timly profit payout to the clients(Dividend right now is Tax Free) and Growth is just that they reinvest it back into the market. its better you always go for dividend option

Answer 9

They are both good, but a dividend is paid regularly. It money that comes to you and you have it. With growth, it's there on paper but you don't realize it until you sell it. You may have to pay high tax rates on the growth at the time of sale. Alternately, the market could tank before you sell it and there is a loss in value.