When To Opt For A Dividend Option In A Mutual Fund
1265
While investing in mutual fund many investors face the dilemma whether to go for dividend option or not. Here’s how to arrive at a decision.
Understand dividend option
In the dividend payout option, the mutual fund (MF) scheme shares the profit with investors by declaring dividends. The scheme pays the investor the amount equivalent to the dividend declared and the number of units held.
When to opt for dividend option
If you need periodic cash flows or income, go for the dividend payout option. Remember, dividends are tax free for equity funds while dividends are tax-free in the hands on investors in debt funds. In case of the latter, this is after fund houses have paid dividend distribution tax (DDT) of 28.84%.
We hope you found this useful. Please leave behind your comments and suggestions. For more, download our mobile app, visit our website www.fundoomoney.com and subscribe to our YouTube channel and digital magazine FundooMoney Indian. Also, follow us on Instagram, Pinterest and Slideshare.
