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Each scheme has its own pro's and con's. If you want a regular income on your MF investments go for Dividend option. If you do not want to disturb your investment for a long time and allow it to grow go for the Growth option.
Sample Returns Comparison - HDFC Prudence Dividend Plan & Growth Plan
Date of Investment: 01-Jan-2009
Amount Invested: Rs. 25,000 (Each in Dividend & Growth Plan)
No. of Units: 261.769 (Growth) & 1296 (Dividend)
Current Value of Investments: Rs. 54,196 (Growth) and Rs. 36,577 (Dividend)
Dividend Earned in Dividend Scheme:
1. On 19-March-2009 @ Rs. 2.5 per unit = Rs. 3,240/-
2. On 18-March-2010 @ Rs. 3.5 per unit = Rs. 4,536/-
3. On 17-March-2011 @ Rs. 3.5 per unit = Rs. 4,536/-
Net Dividend Earned = Rs. 12,312/-
Net Value of Investments in Dividend Plan (Including Dividends) = Rs. 48,889/-
Though the Net value of Investments in the Dividend Plan is Rs. 5,307/- less than the Growth Plan, if you consider the fact that you could've invested this amount in any decent investment that earns at least 8% returns (like a Bank FD) then the net worth of the Dividend would be Rs. 13,996/- which means the net value of investments in Dividend Plan would be = Rs. 50573.8/-
Why Such Value Adjustment?
You might be wondering, why I did such an elaborate calculation to compare the returns. This is because, some people might think that the Growth Plan is better by just looking at the net worth of the Investments but the fact it, that method is incorrect. We cannot do such an assumption because of the following reasons:
a. You are getting a regular cash inflow (though small, it is around 13-18% of your net investment every year) which is superb in terms of just the returns
b. Your capital is intact and has grown on an average of around 15% year on year over the past 3 years which again us superb in terms of just the returns
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What is an option in mutual fund means?
A type of mutual fund with the goal to generate current income for its investors from the premium it earns by selling option contracts. The profits investors earn on the options are taxed as ordinary income, not as dividends, so option income funds are best held in tax-advantaged accounts. This income generating strategy is much riskier than investing in dividend paying stocks, although the returns can be much higher. There are a number of online trading portals that can also help you out when trying to figure out Mutual Funds Jargon. Sites like Reliance Mutual Funds, money control, etc are very good.
What mutual funds have the best ratings?
The mutual funds that have the best ratings include High Yield Bond, Short Term Bond, Long Term Bond, Small Growth, Financial, World Bond, Retirement, Large Growth, and Large Value.
When is best time to buy Mutual funds to capitalize on annual dividends?
Around January and February of every year is the best time if you want to capitalize on the dividend payouts. Most MF houses will pay dividends during March and April of the year.
What are some of the best mutual funds available?
There are many good mutual funds available. According to CNN, some of the best mutual funds available include the American Funds American Mutual A and Sound Shore.
Which is the best gold mutual fund for Indian market?
which is the best gold mutual fund in the Indian market? can we purchase and sell online gold mutual fund without any mediator and how?
What are top 5 diversified equity mutual funds in India?
According to me these are the best equity mutual funds to invest in India. 1. IDFC Premier Equity A fund-Growth. 2. Birla Sun Life Dividend Yield Plus fund-Growth. 3. Reliance Equity Opportunities fund -Growth. 4. HDFC Balanced fund-Growth. 5. ICICI Prudiential Discovery fund-Growth. And to add a pinch of Gold you can add Reliance Gold Savings fund to your portfolio. BY: Chandra Mohan Semwal. Email ID: mohansemu@gmail.com.
What is an option in mutual fund means?
A type of mutual fund with the goal to generate current income for its investors from the premium it earns by selling option contracts. The profits investors earn on the options are taxed as ordinary income, not as dividends, so option income funds are best held in tax-advantaged accounts. This income generating strategy is much riskier than investing in dividend paying stocks, although the returns can be much higher. There are a number of online trading portals that can also help you out when trying to figure out Mutual Funds Jargon. Sites like Reliance Mutual Funds, money control, etc are very good.
What mutual funds have the best ratings?
The mutual funds that have the best ratings include High Yield Bond, Short Term Bond, Long Term Bond, Small Growth, Financial, World Bond, Retirement, Large Growth, and Large Value.
What are some of the best mutual funds?
There are very different opinions on which mutual funds are the best ones. One site that lists some funds that are considered by some the best is: money.cnn.com/magazines/moneymag/bestfunds/actively.html
What is the best way to invest in gold and silver and other precious metals?
Investing through mutual funds is the best option.
Which funds most growth in the three years?
You need to check funds that have the best peforming results. Sector mutual funds like green mutual funds have been high growth over the last 3 years. Sources: http://www.amfi.com/types/green-mutual-funds http://biz.yahoo.com/p/top.html
Why should you invest in the mutual fund when you can directly invest in the same instrument?
As all the other instruments in equity and debts even mutual funds carry risk, but mutual funds are considered a better option because ,you investments will be managed by the professional managers who are in the better positions and they can spread your investment across various sectors around the market .Thus we can say that mutual funds are best option of investment in which few mutual funds like reliance mutual funds and DSP mutual funds are good players in the market .
The best stock to get with my retirement money?
It depends on your goals and what you mean by "best." For most people, the most rational option is probably mutual funds, not individual stocks.
When is best time to buy Mutual funds to capitalize on annual dividends?
Around January and February of every year is the best time if you want to capitalize on the dividend payouts. Most MF houses will pay dividends during March and April of the year.
What is the best mutual savings bank in the world which country's mutual savings bank is well developed and what makes it best?
QT Mutual Bank
How can I find out more about best mutual funds?
Everyone has a different opinion as to which mutual funds are the best or worst. It depends on the experience that each person has had with the mutual funds.
What are some of the best mutual funds available?
There are many good mutual funds available. According to CNN, some of the best mutual funds available include the American Funds American Mutual A and Sound Shore.
