Dividend Vs Growth option

POSTED BY Rajendran ON September 29, 2010 11:40 pm COMMENTS (2)


  Though I understand the the power compounding and continous investment but I have strongly feeling that going for Dividend option makes sense because of below points.

1) Mutual funds would announce dividend only when there is good profits and also when they think the market is bit over heated.

2) In a year atleast there are 3-4 times wherein market gives you a correction of 10% you can better get the dividend money when the market is high and you can invest that money back into the market during these crash time.

 I understand that no body can time the market but still it can be done this way and can maximize the return.

Your veiw on this??




2 replies on this article “Dividend Vs Growth option”

  1. bharat shah says:

    there is no question of loosing interest, as you are equity mutual fund investor not getting any income proportion to time you hold it. on contrary. if the dividend income will be kept in fixed interest avenue till you get opportunate time, say, market gone down after dividend declaration, you may earn. of course, issue of timing the market, simplicity of investment style are related matters, which should be looked.

  2. First of all, from the time of dividend payout date to the time of re-investing that again, you loose good interest on that, which you could otherwise get.

    Secondly, as you rightly said, no one can time the market, so how will you decide the time to enter again in market. When the market is red, generally, we loose courage also to invest our money. Because we all become genius at that time & give number of theories that market will move more down from here.

    So, take the growth option in long term. When the market crashes, invest some more from ur side.

    Hope it will help you.

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