Mutual funds offer growth and dividend options for investments in them. When do you choose the growth option? A brief guide to mutual fund growth option
Welcome to FundooMoney, your 24X7 buddy for all your money matters! When you invest in mutual funds, you need to choose between dividend or growth options. When do you opt for the growth option? We will tell you how to make the right decision in a just a while.
Both dividend and growth options serve different purposes
Dividend option helps you with regular income while growth helps you to accumulate substantial savings.
How growth option of mutual funds work
In the growth option, the fund doesn’t share the profit made out of the investment of the investor but re-invests it into the scheme. As a result, the mutual fund NAV i.e. its net asset value, keeps growing.
What you should do
If your objective is to have large amount of savings in the long term for your major future needs such as retirement and children’s higher education, choose the growth option. This is more so for equity funds. Even for debt funds, if your investment horizon is three years or more, opt for growth option.
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