1. Dividends really do not matter for a long-term equity mutual fund investor.
2. It is a misnomer that a fund manager is working "harder" and is always "on his toes" to generate a dividend for "dividend option" investors.
3. Deriving income through a MF dividend is effectively eating into capital, as the fund is just "removing" money from the main corpus for a "dividend payout", reflected in the ex-dividend NAV for the same units, depending on its own perception and need, and not necessarily of its investors.
4. Dividend payout may, therefore, not get released by the fund every year as it is not a guaranteed fund mandate, despite an investor's expectations due to his own healthy corpus of all his units in the folio, although money may actually be required by him at that time for meeting regular expenses or fulfilling need-based goals.
5. When dividend payouts do happen at the fund's mercy, they deplete the fund's corpus, which loses its power of long-term compounding to that extent, even though money may not have been required by all its investors at that time, who would then have to reinvest such unwanted payouts of their own money on their own thereafter.
6. Also, units of reinvested dividends are treated as fresh investments on the allotted dates for calculating the actual term for capital gains whenever sold.,
7. Moreover dividend reinvestment option amounts to higher accounting that might complicate an investor's understanding.
8. On the other hand, flexible redemption / SWP / STP routes provide exact money to the investors as per their individual specific needs and timeframe, without being dependent on its unilateral decisions, and without eroding the fund's total corpus unnecessarily, thereby continuing to enjoy the power of long-term compounding.
9. In order to build long-term wealth over time to provide for long-term goals, growth option is better as investors are fully in charge of any outgo from their investments.
2. It is a misnomer that a fund manager is working "harder" and is always "on his toes" to generate a dividend for "dividend option" investors.
3. Deriving income through a MF dividend is effectively eating into capital, as the fund is just "removing" money from the main corpus for a "dividend payout", reflected in the ex-dividend NAV for the same units, depending on its own perception and need, and not necessarily of its investors.
4. Dividend payout may, therefore, not get released by the fund every year as it is not a guaranteed fund mandate, despite an investor's expectations due to his own healthy corpus of all his units in the folio, although money may actually be required by him at that time for meeting regular expenses or fulfilling need-based goals.
5. When dividend payouts do happen at the fund's mercy, they deplete the fund's corpus, which loses its power of long-term compounding to that extent, even though money may not have been required by all its investors at that time, who would then have to reinvest such unwanted payouts of their own money on their own thereafter.
6. Also, units of reinvested dividends are treated as fresh investments on the allotted dates for calculating the actual term for capital gains whenever sold.,
7. Moreover dividend reinvestment option amounts to higher accounting that might complicate an investor's understanding.
8. On the other hand, flexible redemption / SWP / STP routes provide exact money to the investors as per their individual specific needs and timeframe, without being dependent on its unilateral decisions, and without eroding the fund's total corpus unnecessarily, thereby continuing to enjoy the power of long-term compounding.
9. In order to build long-term wealth over time to provide for long-term goals, growth option is better as investors are fully in charge of any outgo from their investments.