Growth or Dividend pay-out- which to choose!!

There is a saying that ‘Ignorance is the biggest mistake of mankind’! every word is so true, let’s consider the example of the biggest asset that we have- money. We all know that it’shard to earn and even hard to save, yet we make the grave mistake of analyzing the info available and researching and end up cribbing.

Most of us are aware of mutual funds, heard about them. But in reality, we don’t have much info about why each of them is different and why is that our funds aren’t earning like any other pro? Why? Let’s chuck that ignorance and open our minds and eyes rot the info available and make the most.

The main aim to invest in mutual funds should be your goal at the end and your risk capability. If you know these 2 factors, then we are here to help you. In mutual funds, each fund has its own pro and cons, yet few of them are the best ones in terms of returns and are appreciating in the initial capital more than any other fund.

There are 2 options in mutual fund investment, one is the growth option and the next one is dividend pay-out. Here we explain; what’s the difference which will make in your end capital amount.

Growth option:

This is one of the most sought options, as the name says it gives you growth in the longer term. When talking about any investments, we always look for a longer term. It must be for a longer term, beyond 3 years, to see any change in your capital. So, always have a long-time period to allow your money to grow. Growth period doesn’t give you any short-term earnings but concentrates on your capital appreciation. Here you’re NAV increases, and also the number of shares per unit.

Dividend Pay-out:

This option as the name says you get a pay-out every monthly or quarterly. But, the point here is, this type is suitable for only short-term investments. If you are looking to invest only for a year, then you can choose this option. Here, the capital appreciation is very low to moderate, and gain dividend.

This type is good for senior citizens and families who need a steady income for the invested capital and also a decent appreciation in capital.

We hope this will help you in choosing the right kind of fund according to your needs.

 

 

 

 

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