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  1. Growth stock funds invest in those companies that are growing at a faster pace than other companies in the same industry. These stocks pay little to no dividends.

    Dividend reinvestment simply means putting dividends (payments for owning stock) that you have back into the fund in order to purchase more shares.


  2. Every mutual fund scheme provides its investors 3 options to choose from:

    1) Growth Option: in this, the NAV keeps on growing, no dividends are declared

    2) Dividend Option: in this, the fund manager may decide to pay a dividend
    eg: Suppose a fnd has a nav of Rs.25 n the fund declares a dividend of Rs.5 then the NAV after dividend will come down to Rs.20

    3) Div. Reinvest: in this, the dividend declared is received in the form of more units


  3. Basically, if you are not interested in an income but want your investment to grow invest in the growth option. If you want an income then take the dividend option. The dividend reinvest does not make much sense because as a growth potential the growth funds will give better returns. (Of course it all depends on the fund). The tax advantage of dividends is also nullified because long term capital gains tax is zero in India so in a growth fund if one withdraws after 1 year one will not have to pay any taxes on the captial gains one may have gotten from investing in that fund. So, basically it boils down to two funds. For a good investment for the long term put your money in the growth option. If you want an income and not much growth than take the dividend option.


  4. Growth funds is a good option if your starting investing at an early age and if you do not require money for a while. Dividend funds will give you a declared sum of money each year. Dividend reinvestment funds reinvest the declared dividend to buy more units of the fund.


  5. Dear,
    Growth : 10,20,30,40,50…………….will increase your funds nav IF you need only REDEEM.

    Dividend : 10,20 ,25 (5 dividend),30(10dividend),………. you will get extraincom it will be automatically credited to your bank account.

    Dividend reinvestment : ? …? ….? .dividend will not be credited to your account ,in steed fund will issue more unit to you .

    I hope you got it.


  6. Let us understand what is dividend first.

    Dividend is nothing but a portion of payout (not necessarily from profit as long as MF industry concerned) from your fund value.So don’t get carried away by the dividend declared history. It’s like sharing among unit holders who opted for this (Total amount decided- Dividend distribution tax / total number of outstanding units under this category).

    Amount received is not taxable in the hands of investor. It’s beneficial for individual who are in high tax bracket as DDT works out lesser thro’ MF. NAV falls equal to the amount declared. It is declared in percentage (Face value). Usually it is Rs.10

    In Dividend payout option amount is paid to the investor. In Dividend re-investment option amount is reinvested in the same scheme at the ex- nav rate.

    In growth Option no dividend is declared so no fall in NAV because of dividend.

    It is usually suggested to opt for dividend if investment is less than a year and growth option if investment holding period is more than a year as profits comes without tax in equity scheme (Thanks to LTCG)


  7. In mutual funds their are two options like growth fund and dividend fund. In growth fund the net asset value of the fund will be moving up or down depending upon market conditions. In dividend fund net asset value goes up then as per their terms may declare as stated in terms reference will declare dividend.