2007-12-26 01:31:54 · 8 answers · asked by Venkataramana G 1 in Business & Finance ➔ Investing
Growth is increase in share value, Dividends are what the fund pays out to the shareholders.
A mutual fund is a market basket of stocks and receives dividends from some that it passes through and it sells some during the year creating short and long term gains or loses.
So usually in December the give you the long term, short term and dividends and maybe a little interest, this causes the share price to drop that same day and you will pay taxes on the income. You don't pay tax on the gain in share value until you sell.
2007-12-26 01:35:11 · answer #1 · answered by shipwreck 7 · 1⤊ 0⤋
Dividend is the share of your profit, which the company would be distributing to you. So if you opt for the dividend pay out scheme, then u will get the dividends whenever the company declares it. So, once the dividends are declared, the NAV of the fund comes down correspondingly.
But in the growth option, the dividends will not be distributed to you, instead the profit gets aggregated and is directly reflected in the increase in the NAV of the fund.
2007-12-27 23:21:42 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Dividend Pay out option in MF is suggested if you want to enjoy a regular tax free income (dividends are tax free) and the same is being distributed to the investors from the Net Asset Value of the fund and the NAV falls after the distribution of the dividend.
Growth option in MF is advised to the investor who does not expect regular income out of the investment-so growth option dividends are added in the NAV and it has cumulative effect in the long run.
My opinion is Dividend Pay out and Growth options are good for the investor
2007-12-26 19:46:48 · answer #3 · answered by mohan s 2 · 0⤊ 0⤋
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.
2016-04-11 01:08:13 · answer #4 · answered by Anonymous · 0⤊ 0⤋
When u invest in a share, u derive the benift of cash appreciation (capital gain) and fixed income ( dividends). when firms decide to give the investors dividends, they pay it out of their reserves. But in situations which require the firm to venture into new projects, they will not declare dividends and use this money called retained earnings to fund such projects. so there are firms which declare dividends and othes which dont. mutual fund managers will look out for firms which offer consitent, sustained and increasing dividends and then categorise them under dividend yielding category of funds. such investments will be focussing only on firms declaring dividends. the rest of the money will be invested in growht funds which offer potential for capital appreciation. so this is the difference by which fund managers split the invesments in these two categories.
2007-12-28 01:33:42 · answer #5 · answered by arvind n 2 · 0⤊ 0⤋
It is akin to a fixed deposit with the options of (1)reinvestment of interest so that you receive a lumpsum at the end of a prescribed period and (2)receiving interest at regular intervals and the principal at the end. Only difference is in mutual fund there is no guarantee of fixed return.
2007-12-26 01:47:40 · answer #6 · answered by uppaluri k 5 · 0⤊ 0⤋
The people who need regular income they can choose dived end option. The growth option for the people who are having surplus money can invest and en cash when they are in need.
2007-12-27 22:41:22 · answer #7 · answered by SRINIVASAN R 5 · 0⤊ 0⤋
in the growth option u money will be growing until u make redeem ur money.
in the divident payout option, the profit will paid to u at the periodic.
2007-12-26 12:47:22 · answer #8 · answered by parsar 3 · 0⤊ 0⤋