1. In the case of equity mutual funds, dividends really do not matter for a long-term investor.
2. It is a misnomer that a fund manager is working "harder" to generate a dividend for "dividend option" investors.
3. There is also no guarantee even of an yearly dividend distribution in mutual funds.
4. You should not try to derive income from it because you effectively eat into your own capital, as the fund is just "removing" money from the main corpus for a "dividend payout".
5. Mutual funds are highly liquid and let you realize the gains from the investment, through redemption / Systematic Withdrawal Plan (SWP) / Systematic Ttransfer Plan (STP) routes, whenever you need it.
6. On the other hand, dividends may not necessarily be released when you actually need it.
7. Redeeming investments in equity mutual funds after one year from the time of investing, will be tax free, which is equally tax-efficient.
8. It also leaves the question of timing out of the equation for generating income, when you need it.
9. Generally speaking, any investment in equity should be cumulative.
10. Dividend option can only be treated as a periodic profit booking, not as an additional gain as in the case of stock dividends.
11. It is, therefore, your own money being returned to you, and your investment gets depleted to that extent, losing its power of compounding.
12. If your goal is to build wealth over time to provide for your long-term goals, then go for the growth option.
2. It is a misnomer that a fund manager is working "harder" to generate a dividend for "dividend option" investors.
3. There is also no guarantee even of an yearly dividend distribution in mutual funds.
4. You should not try to derive income from it because you effectively eat into your own capital, as the fund is just "removing" money from the main corpus for a "dividend payout".
5. Mutual funds are highly liquid and let you realize the gains from the investment, through redemption / Systematic Withdrawal Plan (SWP) / Systematic Ttransfer Plan (STP) routes, whenever you need it.
6. On the other hand, dividends may not necessarily be released when you actually need it.
7. Redeeming investments in equity mutual funds after one year from the time of investing, will be tax free, which is equally tax-efficient.
8. It also leaves the question of timing out of the equation for generating income, when you need it.
9. Generally speaking, any investment in equity should be cumulative.
10. Dividend option can only be treated as a periodic profit booking, not as an additional gain as in the case of stock dividends.
11. It is, therefore, your own money being returned to you, and your investment gets depleted to that extent, losing its power of compounding.
12. If your goal is to build wealth over time to provide for your long-term goals, then go for the growth option.