Have you noticed that every mutual fund is marked with (D) or (G) in its name. It is single letter in the mutual fund name, but it provides more value to your money. In this post, we will explore Growth vs Dividend option in mutual funds. How it impacts you and your money. Let us explore few funds names and identity the (G) and (D) in mutual fund name.
L&T Emerging Businesses Fund – Direct Plan (D)
Kotak Select Focus Fund – Direct Plan (D)
Mirae Asset Dynamic Bond Fund(D)
Mirae Asset Dynamic Bond Fund(G)
Growth Option – Reinvest your money:
In growth option mutual funds, the profit earned by your investment would be reinvested in same fund. Your investment value goes up if your mutual funds creates profit. The same way your investment values goes down if your funds makes loss. Growth option is good for long term investment and it would provide compound interest effect for your investment.
Long term investment should fall in Growth option.
There are hundred of growth option mutual funds in industry. Examples are SBI BlueChip Fund (G), SBI Magnum Midcap Fund(G).
Dividend Option – Withdraw your profit:
Dividend option mutual funds offers the profit as dividend from time to time (monthly, quarterly etc.). So you would get the profit monthly, quarterly or yearly basis. If you want regular income, you should opt for Dividend option.
Expecting regular income from mutual fund, then dividend option for you.
Franklin India Opportunities Fund (D)
L&T Emerging Businesses Fund – Direct Plan (D)
Kotak Select Focus Fund – Direct Plan (D)
Invesco India Growth Fund – Direct Plan (D)
Mirae Asset Dynamic Bond Fund(D)
Dividend or Growth? It is your choice:
The growth option works similar to its name and provides the compounding effect to the investment. The growth option reinvests the gains over and over again and the returns are compounded, resulting in higher returns in long term.
Dividend payout option is suitable for investors who want regular income from their investment.
To grow your money in investment, compounding is important. So we suggest you to select the growth funds if you are not depend on mutual fund for regular income. Happy investing.