Quick Answer: Which Is Better Growth Or Dividend?

What is difference between growth and dividend?

Mutual fund houses offer two kinds of schemes: Growth and dividend. In the growth option, profits made by the scheme are invested back into it. The dividend option does not re-invest the profits made by the fund. Profits or dividends are distributed to the investor from time to time.

Is it better to take dividends or reinvest?

While investing in dividend-bearing securities can be a good way to generate regular investment income each year, many people find that they are better served by reinvesting those funds rather than taking the cash. Reinvesting dividends is one of the easiest and cheapest ways to increase your holdings over time.

Are dividend mutual funds a good idea?

In most cases, because of their income-generating nature, dividend mutual funds are best-suited for retired investors. For example, when interest rates are low but economic conditions are generally good, bond funds can have lower yields than dividend mutual funds.

How much do I need to invest to live off dividends?

Living off dividends works better as a strategy when you have other sources of income to supplement it. Experts often talk about the 4-percent rule, which states that you should withdraw 4 percent of your portfolio each year during retirement to live on, leaving the rest to generate interest.

What is Blue Chip Fund?

A Blue chip fund is a term used to indicate well-established and financially sound companies. Blue chip funds invest in stocks of those companies that have a credible track record with sound financials along with regular dividend payments and profitability over the years.

What do you mean by dividend?

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business (called retained earnings) and pay a proportion of the profit as a dividend to shareholders.