Once upon a time, time was easy. Mutual funds were nothing but mutual funds and there were not many options to pick from. You were having money and a mutual fund company was having a scheme. You put your money in a scheme of a particular mutual fund without too much of thought of plans on scheme and earned returns on it.
This all things were once upon a time. But now you have a basket full of mutual funds and each fund has scores of schemes. Today in market you can find enormous kinds of mutual funds that will offer you with number of options to invest in.
Similar to a growth-oriented mutual fund, a mutual fund that offers you dividends (an amount that a mutual fund distributes amongst its investors from the profits it makes) at regular investments and a mutual fund that pays you dividends only to reinvest the same amount and give you more units of the same.
So what do you think as an investor? While there are enormous schemes with very attractive names that fight for your attention in the marketplace, here we will confine ourselves on helping you analyze the most popular dividend-paying MF scheme and a growth-oriented MF scheme. That is, which of the one is the best?
When we began our journey towards the mutual fund industry we very much excited about whenever a dividend was declared. The reason was that, we thought, we did not have to sell the units of the mutual fund scheme that was declaring a dividend. People, too, used to come to us and say that they wanted to buy a scheme declaring a dividend.
But slowly we started to learn all about mutual funds by asking all sorts of relevant questions. And there were loads of related to dividends. It took a while for us to realize that dividend is not something additional or extra that a mutual fund was giving its investors, but a part of the investors' own money being returned to her/him in the form of dividends.
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