Maximum loss to buy call option can suffer is equal

Before we move on to discussing what suits you best, let us get down to some brass tacks. The difference The growth option simply implies that the profits you make stay reinvested. Dividend payout implies that a part of such profits an amount that the fund decides to give out is stripped from your NAV and given to you.

Hence, your NAV falls to the extent of dividends. This is why the NAV of growth and dividend option are not the same. In dividend reinvestment option too, profits are stripped. But instead of giving them as cash, they are allotted to you as units at the prevailing NAV.

Hence, indirectly, by adding more units, you simply stay invested in the fund. Conceptually, the dividend reinvestment option is the same as growth option for all equity funds. Two key factors will determine what is appropriate option is for you: Cash requirement and time frame 2. Most people base their decisions on tax efficiency. While it is a key deciding criteria, let us also look at how other factors too, will play a role in choosing between dividend and growth.

Equity funds are meant for the long term. Your reason for choosing an equity fund must be to build wealth towards some goal which is perhaps at least few years away. That simply means you should stay invested in the fund and not take the cash out unless you will invest the dividends back diligently to help compounding work for you.

Since, long-term capital gains are free of tax, the solution here is simple: As a general principle, go for growth or dividend reinvestment in equity funds. But there are exceptions: One, in case of theme funds or sector funds that you hold tactically, it makes sense to either opt for dividend payouts or book profits as the fortunes of themes can take a turn after one good cycle.

Two, in case of ELSS, avoid dividend reinvestment as every reinvested unit will be subject to a three-year lock in. Prefer growth, Three, if you are generally risk averse and prefer to take your money out to invest in some debt option, then you should consider payouts or set triggers to book profits. This category gets a bit tricky because the dividend suffers dividend distribution tax DDT. DDT is nothing but the tax on the dividend paid out in debt and debt-oriented funds and gold funds. DDT is not applicable for equity funds.

Let us suppose a fund declares Rs 10 as dividend. A DDT of Now while you will get Rs 10 in your hands, Rs 2. Now, to know the tax implication Let us split your universe into two based on your cash needs: You need some cash flows from your debt fund: In this case, you can choose the dividend payout or the systematic withdrawal plan SWP under growth option.

Look at the table below. But please ensure that you do not end up paying exit load. Opt for SWP post the exit load period if you wish to avoid the load. But if you can park your money for more than a year and have no immediate cash flow requirements, opt for growth right when you invest and do a SWP from the beginning of the second year.

Remember, switching between options will also unnecessarily entail capital gains tax if you have profits. Hence, get your investment time frame right when you start your investment. In this case, you have 2 options — to go for growth or dividend reinvestment. Consider your fresh investments through the above routes. But if you make your switches now, do take into account the exit load will vary for each fund and the capital gains, if any, you may suffer on the fund now, especially if your holding period is less than a year and you do not have a long time frame for the investment from here on.

Mutual fundsSlider. Hi Vidya, [Quoting Vidya] Two, in case of ELSS, avoid dividend reinvestment as every reinvested unit will be subject to a three-year lock in. Prefer growth, [End of Quote].

Pls correct me if I am wrong. To conclude, rarely is it possible to encash the total dividend out in to our account in ELSS Dividend reinvestment option. To get out of this vicious cycle, most fund houses allow you to switch from a dividend reinvestment option to a dividend option by giving a request letter or change option slip. This can be done even during the lock-in period. I am a live example of the same. Since I invested in the ICICI Pru Tax Plan Dividend Re-invest option I am not able to take out my complete funds even after wait of 7 years since it keeps on reinvesting and start a new Lock-in for the new units purchased under the re-investment.

Ankush, you simply have to switch to the dividend payout immediately. In fact, even during your initial lock-in period you are allowed to do this. If I do a switch from dividend re-investment to dividend payout, will the 3 year locking period start again from the date of the switch?

Yes you can switch. But it will be considered a sale and purchase for tax purpose. Hence capital gains tax, if any unlikely or very low in dividendwill be applicable. I have started investing in ELSS Div-Reinvest schemes since But both my fund houses has converted them to div-payout. Seems reinv do not apply to ELSS schemes any more. This thread is quite old. These are great points, and I think by default — people should opt for the growth option, and then they should have a really good reason to choose the dividend option.

This way they will ensure that they take the right decision most of the time. In absolute terms, it will matter when the amount invested in large, although yield difference will seem marginal. So how does one decide between daily dividend Vs weekly dividend Vs monthly dividend.

Hi Apoorv, Thank you. Typically, its the liquid and ultra-short-term funds that have a maze of options — daily, weekly, monthly and so on. For the other debt categories it is mostly, monthly, quarterly and so on.

We shall therefore restrict our discussion to liquid funds and ultra short term. Before answering your question, let us step back a bit to understand why funds created these many options. Large companies find liquid funds to be great parking grounds for their working capital money, for 2 reasons: Liquid funds can be parked even for a day.

Parking all the money in their cash credit account called CC in corporate terms, these accounts are meant to overdraw would earn zero return. But then, corporates did not want to pay high capital gains either.

It therefore helped them to take out as much as possible as dividends even if they stayed for days it is separate story that corporates used this to even book short-term capital losses using what was called dividend stripping strategy.

But we will keep that for another day. Since, they are uncertain as to when they need the money, it helped them to have dividends as frequently as possible to keep their NAV value at bay. So opting for a monthly dividend may not suit them if they were to suddenly exit. Note that their marginal rate of tax is higher than ours as they do not have slab rates like us.

And hence the options, that you see today cropped up to cater to them. Hence, the chances of a short-term capital gain is rather low in dividend option.

If you have a reasonable idea of when you will need your money and you can plan accordingly, then you can simply be neutral to this under a reinvestment option.

The quantum reinvested is either small or high. In a weekly option, the money stays longer and note that it earns returns every single day before it is stripped and reinvested, whereas in a daily option, it is stripped quickly and reinvested.

That was a long story Tks, Vidya. As Manshu says the growth option should serve most people by default. The article reminds of an issue reg.

Most people ignore STCG while setting up the STP. If I choose the dividend or div reinvestment option in the source debt fund and if I ensure transfer frequency is not less than the dividend frequency could I assume for all practical purposes zero STCG or LTCG? Even then I find this a hassle.

I see no need for a source debt fund. A simple transfer from a SB account should do for every case I can think of.

Returns from the debt fund over a few months will not make much of a difference. You are right that people often ignore the STCG implications. If the source fund is a liquid fund, the entire accrual is typically paid out. Hence chances of STCG should be nil, if your STPs are accordingly planned.

But I cannot say that with certainty for an ultra short-term fund. While most of them seek to pay out, given that they can have a higher proportion of MTM securities as they can invest in slightly longer instrumentschances are that they may not always have accrual income to distribute. Some money may be left without distribution. In all other debt funds, there is no way to ensure this. STPs make sense when investors have a huge lump sum and are tempted to invest it right away as a bulk in the markets, instead of the money lying in the savings account.

To prevent any ill-timing of markets and get a few extra bucks and again only when you get a large sum say a jack pot or a say some robust inheritance money: The less talked of part of an STP, is to use it to shift from equity to debt, especially when one needs to reduce equities holding in a phased manner closer to goals like retirement. While not all funds may offer this as a feature directly, many platforms provide this for investors.

This has more value. This is a very good set of information that you have thrown out there! Thanks for sharing and making investors aware of the options available and the situations that makes these options valuable! This is related to Debt Funds which you have explained in this blog. Two key aspects to consider while choosing the funds are the period of redemption one year.

Some Debt Funds are coming with Five Year Lock In period say for example [DWS Hybrid Fixed Term Fund -Series 10 -Growth ], my questions are. Typically longer tenures are preferred when interest rates have peaked and are set to fall. We are not necessarily in the peak. The descent has happened a while ago. Still, there is good scope for locking in to longer term FMPs for returns now. FMPs are new offers. Nobody can vouch for their portfolio as they would not have built one at the time of NFO.

It is therefore important to know the scope of portfolio and potential returns by looking into the offer document. If the offer document, for example, says that the fund will invest quite a bit in say less than AAA rated instruments say AAthen it is certainly going to give you that extra bit of returns for the addl. In case of FMPs the timing risk interest rate risk is much lower than an open ended fund.

It will then provide the accrual income interest income from these instruments to you as gains. Also, as they are close ended and face no redemption pressure from you, they are not forced to actively churn or manage their portfolio or constantly keep cash to pay investors. In other words, FMPs are less actively managed over the tenure, when comapred with an open-ended fund.

On the flip side, that could also mean that they may not participate in some quick rally during such a period; on open-ended fund, on the other hand, will capitalise on the same.

FMPs are more comparable with bank deposits than open-ended debt mutual funds as the latter seeks to generate superior returns through active management. Great article, as always. I have one minor quibble though: This will be slightly lower than the income tax slab of Think of it this way. If I am invested in dividend option, I get Rs.

None of this changes the thrust of your argument, but as I see it, dividend option in debt mutual funds is considerably more advantageous that woudl appear at first sight.

The last budget has narrowed the gap by increasing DDT, but the difference persists. Unless my math is wrong, in which case I should be very much obliged if you would correct it. Hi Hari, There is no denying that for the short term the benefit of dividend still remains…we have only said it is now diminished than before. But I would disagree with this practice of calling This is being used by quite a few planners. Look at it this way. Let us assume you have a liquid fund under dividend option.

Currently DDT plus SC plus cess is Now assume the fund declares rs 80 as dividend. The NAV falls to Now theoretically assume that you sell at this point or simply calculate your yield at this point. What is the money you totally get? Hence yield is Now this is incorrect because the actual returns post tax as calculated above is much lower.

投资学第7版Test Bank答案20_百度文库

This is theoretical and does not tally, if you actually work the net returns in a simple, cash flow based manner. It is calculated by taking 2. Let us face it….

That is what matters at the end…number games not withstanding. I love this blog. FundsIndia is doing a wonderful job in providing quality advice and that too for free. Many investors may not get it even from paid advisors. However, with all due respect, I must say that you are wrong in effective DDT calculation above. So, let me give you a very practical example:.

Here are some values: RLF-G NAV on May — Rs. Say I sell it on Jun RLF-G NAV on Jun — Rs. Consider that I buy RLF-MD plan on 2-Jun and sell on Jun Here, when I sell my units I incur a loss which is what you showed in your example. Now it is bad example since nobody should invest in MD plan anywhere in between the month and sell just after getting dividend.

Because you incur a loss and with Dividend Stripping loophole caused, your effective yield is reduced. I am completely with you and hence another suggestion that you gave to an investor in another post that there is no difference in DD, WD, MD, QD plans as for dividend yield. Thank you for visiting the blog and for your detailed post. Only link I find missing in your calc is the capital gains of the growth scheme.

When you are considering DDT on the dividend pay out option, you shouls consider post-tax returns on the growth option. Do not annualise returns when investors did not have one. Yield calculations often lead to big nos. As for taking theoretical examples, it is to make the learnign easier for readers. I hope you appreciate that one cannot sit in a transaction platform like ours without knowing the practicality of it Tks.

Well I do not have any further comment. So we shall have to agree to disagree Thanks, Vidya. Dividend reinvestment is much better than growth option. MFs are of no use. Fund managers do nothing. They do not trade regularly. They come to office shake hands with colleguesdrink coffee, play video games and then go to club or home. Why should the MFs move with the market? All experts So called suggest the small investers not to time the market than WHAT THESE SO CALLED FUND MANAGERS ARE FOR?

I am no expert Than these so called experts come a dozon per dime. THIS MUTUAL FUND BUSSINESS IS TOTALLY FAKE AND IS TO LOOT YOU ONLY THE FUND MANAGERS GET RICH BY IT. Hi Gaurav, If your only requirement is liquidity, you could go for liquid funds.

But investing rs every month without any goal may not be a prudent investment option as liquid funds are for temporarty parking of money and not for welath building. So, now suggest some good investment options for me.

Hi Gaurav, If your investments keep varying, you can use the alert SIP or flexi SIP option available with FundsIndia for equity-oriented funds.

Your investment can be a combination of balanced funds, MIPs and liquid funds. The advice given in a blog can be misconstrued as general advice. Fund requirements and needs vary across individuals. Hi Vidya, nice post. Could you also suggest something for me. I would like to invest sumthing for my baby who is 1. Can you please suggest something for me too? I am a working lady and would like to invest something for my baby who is just 1. It is a very prudent plan to start investing early for a kid.

Would be happy to help. But we would need a lot of details such as your saving capacity, your risk profile, your time frame, what si the goal that you are saving towards — education, marriage etc. All this is best addressed if you use our Ask Advisor facility rather than a public forum like a blogusing your FundsIndia account see this file to know where the feature is: It does not cost you. Schedule a call so that our advisor can call back and help you build a portfolio.

Hi Vidya, I want to setup a VTP from a liquid fund to an equity. However I am unsure as to whether I should choose dividend reinvestment option or growth for liquid fund.

I am seeking advise specifically in terms of tax that I would incur in each option. Just for calculation purpose, say, I put a lump sump of 1. Also I would be continuining to invest in monthly basis in these funds for say next years. You will incur short-term capital gains if growth is opted.

Or you will suffer Prefer growth whichever tax bracket you are in. No ddt n dividend. Hence youc an opt growth or dividend reinvestment. Hi Vidya, Thanks for clarification. Would that change any of your above suggestion. Also when I do a VTP from Liquid Fund to Equity on a monthly basis, would that also incur me any tax since I have not left the investment for more than 1 year…maybe only 10 days into Liquid Fund investment since my first VTP to equity fund would start.

So if I choose growth option in liquid fund, it would encur STCG tax, correct? But then I would not be transferring all funds from liquid to equity in one go. Maximum funds would stay or keep on adding in liquid fund for more than a year and only certain specific amount would be redeemed from liquid so as to invest in equity fund. SO in such situation which is the best option to incur minimum tax?

Also can I change the type from growth to dividend reinvestment from fundsindia itself. Also for SWP from Equity, is there a way in which I can redeem the unit which was purchased a year back rather than most recently purchased unit so as to avoid any tax impact. Or would I have to leave the investment stagnant for 1 year after my last SIP before setting up SWP?

Which would be best option. There is no difference whether you do a VTP or STP. The fact is the money will suffer short-term capital gains tax if stock market news pdf books telugu for less than one year. For the purpose of deciding the time period of investment — the rule of FIRST IN FIRST OUT needs to be applied. There can therefore be no single formula.

Your call would be whether your money is mostly held for less than a year or not. If it is mostly parked for less than a year then you should use dividend reinvestment. If you do not want the hassle, you should simply stick to growth as the difference is marginal You can switch between growth and dividend reinvestment but fund houses treat it as a switch and hence capital gains will be applicable. It is therefore not a good idea to constantly keep changing between the two.

As we said earlier, FIRST IN Exchange rate calculator euro to rand OUT method is adopted for taxation.

So if you are starting your SWPs says just one year after your SIPs, then there are chances that some units may be less than a year old even if you follow FIFO. Rs inhdfc equity through SIP please advise me whether it is right investment for 10 years time.

The funds are good but why should you be investing all your SIPs in one fund house? You may have some duplication in portfolio and benefit from only one style of investment.

Also I want to invest 1Lakh one time as i have the cash in hand currently. It is good that you have set yourself a time frame. Hope you will invest with a goal in mind. The yr time frame is too short for you to go fully in to equity funds. Your amount and time frame would require us to discuss with you before we can suggest funds.

It is free of cost. Thanks Vidya, the website ask to much of futures contract traded otc for creating account and hence below details and appreciate your inputs:.

Target amount around 2 cr by 55 yrs Monthly investments willing to make: I understand your predicament. At present, we answer only general queries through the blog.

Our portfolio optionsxpress futures trading services, which come free of charge, is a continuous service available to our account holders. Let me know whats a mutual fund? If i invest Rs one lakhs for a minimum of 5 years which will give much benifit? But in the long term ninja trader forex brokers have trading on the binary options investing at least themselves to beat inflation as well as all other asset classes such as debt and gold.

I want to invest 5 laks into Liquid fund for months time which I need for downpayment of my house. I want to invest another 10 laks for one year in liquid fund or FD I am NRI so my interest on FD is tax free? Hello Ramesh, You may choose any of the funds we have mentioned for the short-term in our select funds list. S and Canada cannot invest in certain funds. NRE deposits are tax free whereas liquid funds will suffer either capital gains tax od dividend distribution tax based on which option you take.

FROM THE DATE OF SHIFTING?? FROM THE DATE OF INVESTING IN THE MUTUAL FUND. With effect from 1. However, the amount of loss so ignored shall be deemed to be the cost of purchase of such additional units referred to in clause b as are held by him on the date of such sale or transfer.

In your case, your date of new purchase will be the date of shifting to the growth plan. Hence, if you exit 6 months after moving to growth, you will suffer STCG or if it is a loss in case you have been issued bonus units …such loss shall not be allowed to be set-off. For the bonus units, the date of allotment will be the date to be considered for purchase.

Put simply, to first of all enjoy any tax benefit from bonus stripping, you should have held the units from the date of shifting for a period of thee months before the bonsu units are issued. And the original units other than bonus units have to be held for at least 9 months from the bonus issue.

Only then, the set-off of loss will kick-in. Hi, I read with interest the blog and your well researched replies. I for long time have a doubt about ELSS schemes.

I expect these funds should perform better than equity funds in view of the mandatory lock-in period. The fund manager has an assured capital to play with during the lock-in period. In reality this is not happening and I find their performance is not much different than equity funds.

Secondly since PPF savings limit has been increased to 1lakh per year maximum under 80cc there is no charm in going in for ELSS. Your observation about ELSS not performing any better than regular diversified funds is true.

Perhaps the lack of pressure also makes these funds or fund managers a little laid back. Besides, there are only so many opportunities that are untapped. So in that sense, they are no different.

As for PPF, ELSS is linked to markets and the risk-return ratio is entirely different. Leave out the volatile markets of last few years, the returns that ELSS can generate or has generated in the pre era is far superior to a fixed-return product like PPF. Hence, I don;t think they are comparable.

Also, PPF has many limitatiosn such as higher lock-in; ELSS has amonst the lowest lock-in for a tax-saving product. Both these options can find place is a tax-saving portfolio if planned judiciously.

It has been a great experience in reading your explanations to the vast number of queries, which also provoke me into contributing my two paisa worth thought. IMHO there seems to be a bias in your reply that favours equity based products as compared to a simple debt product such as PPF. Firstly, according to me return on PPF as a debt product with voluntary contributions has an stock market predictions tracker sovereign guarantee as the payouts are from the sovereign.

Even if the returns may be lower as compared with voluntary contribution to EPF, savers other than those who are employees can beenfit from PPF.

The current interest payout at 8. Secondly, accumulated balances in PPF are not subject to the risks to capital value as compared to exchange traded auto bot make money or equity products.

Even tax free infrastructure bonds are subject to market risks due to their being traded in exchanges. Thirdly, PPF is easy to manage in terms of the savings bank account approach, which can be operated across both the bank and postal network.

In spite of all of the advances in computerization, there are still a large number of persons who are not exactly comfortable with managing the complexity of maintaining fund or demat accounts. I think that these are worthwhile tradeoffs especially for lower or middle income households for whom, certainty of savings is perhaps more important than the uncertainty of capital appreciation and in worst case captial loss offset by the inflation beating returns that are at best aussie forex and finance pty ltd on annualized percentage basis.

It would still make sense for middle income households to accumulate Rs 1 lakh per year per family member in a safe product every year which could grow to a substantial sum over a a minimum of 15 years if not longer. As many sensible financial advisers emphasize, difference in wealth creation is often attributed to the effect of regular savings of substantial amounts in a diversified manner across major asset classes over a long period. In such an approach it would be important to have both low risk fixed income instruments as well as high risk high return capital market instruments.

How advisable is it to go for it? Hello Snehal, If you simply transfer Rs 50, over 10 months, the STP will give you short-term capital gains tax under the growth option the dividend option will suffer more DDT than your tax bracket. Hence for such short period assuming you are starting the STP soon after investing in the money market fundyou might as well do an SIP from your savings account.

Investing in balanced funds is a good idea provided you can hold them for years and invest systematically for at least years. Hello sir, You can avoid showing the dividend reinvested amount as dividends forex vs futures trading anyway exempt in your hands and DDT is deducted. But in case you have sold the units and you do have capital gains based on the reduced NAV after dividend payout at the time of sale, it has to be shown as capital buy free livestock sell signal software download indian stock market. I have invested in brila and uti dividend yeild fund in dividend reinvestment option of Rs in each fund for one time i am 28 now and as i do business i will not be able to do SIP my query is that is both these funds enough to generate a target of 50 lakhs when i turn 60 years old.

Take stock of it every few years and add more money if need be later. But wonder if you only need Rs 50 lakh for retirement? Hope you considered the impact of inflation on your cost of living. Do use the calculator in our retirement solutions service to know hhttps: Vidya, a nice article explaining when to use the dividend or growth option — you seemed to have covered most of it was linked here by you from your other article https: Do all Ultra Short Term Debt funds have Dividend Reinvestment option?

If not, where can I the list such funds offering this option? I want to invest lumpsum to start with and then SIP into the fund on a monthly basis.

This would be my emergency fund of my portfolio. Hi Sandeep, Yes, most of the ultra-short funds will have dividend reinvestment option. You can view traders binary options reviews entire list in your FundsIndia account,within the said category.

If your holding period is less than 1 year, dividend reinvestment is a good option for your tax bracket. But remember that ultra short-term funds will mostly have some exit load.

I think you may have misunderstood the concept of annualised return in mutual funds. Yes, with NSC, depending on the rate which government offers it is possible. It is not annual return multiplied by number of years. In financial parlance, any returns less than and up to 1 year is absolute and beyond that it is annualised compoundedwhich is why universally, annualised return or CAGR is used for returns more than 1 year.

This happens when interest or the gain stays along with the capital and also maximum loss to buy call option can suffer is equal earning returns. While you may look up in the net on how compounding works, you can also use the rule of 72 for quick calc. Divide 72 by the rate of return to get the number of years. Rule of applies for tripling and Rule of for quadrupling. It looks like the returns depicted for these funds with dividend reinvestment option is before applying DDT, correct? BTW, I am different Hari than the dj sava ft.

andreea d & j. yolo – money maker commented some time back. We have not given any Did. But, dividend reinvestment very much suffers DDT.

So any returns is always post DDt and in any case the NAV is after such DDT. Hence, any return calculation will be post DDT. They both report the same returns I cross checked with FI as well.

However, the absolute returns are different, which I am not sure includes the DDT, and how it can be -ve in case of dividend option. If you have an activated account, pl. Our advisors can also help you build a long-term portfolio with sound asset allocation. Pls explain me whether large cap scrips and A group scrips are one and the same? Like wise Mid cap and B group scrips? Also generally people say that investing in Large cap scrips are more beneficial than investing Mid cap schemes?

Hello To make neocash, Group A scrips are highly liquid scrips and typically are large or form part of top companies by market-cap.

Group A will be both large-caps and emerging large-caps those that are not yet very large. Group B will consistent of all residual stocks that are not under Group A or Group S BSE Indonext or sme companies or Group Z companies that fail to comply with listing requirements. BSE Midcap is not a group; it is an index based on the market-cap size of companies mid-sized companies. Investing in large-cap or mid-cap is a matter of risk and return reward you want.

Mid-caps come with high risk and high returns. Also, being a large-cap does not automatically mean good stable returns. If you are an invesgtor, you need to first understand, the sector performance and business performance of a company, whether large or mid-sized, before investing. That is the only key to good returns. I have savings of almost K in my savings account which i will require in coming months for my higher studies.

Which option should i go for GrowthDividend Re-investment and also can you guide me for any specific Funds to invest. I want to invest money for different time frames of 1 to 5 years. A return of over 10 percent or so will be fine. Pl convey what are tax implications of FMP with a tenure starting in FY and maturing in example start date Febmaturing Best replacement stock for remington 700 sps tacticaland FMP starting Feb Maturing My questions are focused on funds which I understand are risk averse.

In your opinion can there be a equity or debt equity mix fund which has a consistent good returns for say around last years? Most of the persons who work as financial adviserswhether in person or even in talk show on channel are not worth. Thank you for reading the blog and writing here.

This is an ongoing feature to ensure that you get on-demand advisory support, not just at the time of buying a fund but through the period of holding. We do not recommend capital protection oriented funds as they are not efficient in delivering returns.

I am forwarding your query to one of our advisors. They will get in touch with you for your query. In future, too, pl. This is a free service. The blog may pl. Under dividend reinvestment optiop, dividend earned to be accounted for when units are redeemed or is it to be accounted for in the financial year in which it is earned? Hello Joginder, on reinvested units, any gain calculatione etc. If your holding is greater than 1 year, then opt for growth. I am investing Rs.

Is it good idea to switch to debt funds for the same purpose?? Hello Vidya, I am planning to start investing a SIP in a HDFC Diablo 3 strategy guide console version fund. I am looking at long term say years. Should i go for Growth option or Divident Re-investment option? Hello Roshan, sorry for the delayed response. They are the same in equities.

Simply go for growth. Hi Vidya, First of all i want to congradulate you for patiently computer configuration windows settings security settings local policies security options xp each and every ones query.

Is it prudent to invest this cash in a liquid fund? Hello Shajji, Yes, liquid funds are a good option to investing for short term in lieu of the entire money lying in a savings account. You can go with dividend reinvestment. I am afraid, I am constrained from offering you fund advice in this forum. If you have an account with us, pl. Hi Vidya, Best way to make big money on runescape f2p mining for the reply.

Do i need to pay any tax while withdrawing the funds?. Hello Shaji, Sorry for the delayed response. Hello, sorry one more doubt. I will require the money may be may not be after 4 to 6 months time. Also each divident re-investment amount will be considered for LTCG or How much money does a seamstress make tax depending on the period of investment like in a equity fund.

Is indexation apply on debt mutual fund with dividend option for long term investment? If yes, how to account for div. Dividend will not be added while calculate capital gain as it is seprately taxed at the AMC end DDT. Tiem period for investment for non-equity fudns have changed post budget. I had invested Rs. If there is a tax liability, how is it arrived at? Hello Susan, Sorry for the delayed response. Request clarification on the following 1 While computing absolute gain should we consider dividend reinvestment or only dividend payout?

Best replacement stock for remington 700 sps tactical about the delayed response. I am assuming you are just asking about how to calculate gains. If you have a dividend option, ensure you add up the dividends to know your absolute gain. In dividend reinvestment, it will anyway be reflected.

But pl note dividend paid out is not taxed in your hands. Returns less than 1 year are absolute and over 1 year are usually shown as annualised. Hello, Vidya I am a 40 yr old Nre and new to Mutual funds. I would like to invest Rs 10k through SIP route for next 10 yrs. Hello Narayan, Sorry for the delayed response. Trading oracle binary options strategies and tactics pdf blog is mroe of a discussion forum.

We offer free fund advice and portfolio review for all our investors. Request you to open an account with us no charges to enable us to help you with any fund advice. You may be aware that we are an online platform offering which offers, convenient hassle free transacting experience for your entire family with a single login and provide quality investor advisory. If you wish to know more and need help opening an account, let me know and our support team can help you. Dear Vidya, First of all the explanations in this blog really helps a below average investor like me a lot.

Wish to know two things: For us to be able to help you with portfolio advice and review, you would have to be an account holder with us. Once your account is activated you will hear from our advisors. Else, you can use the help tab and use the advisor appointment feature to ask your query. Request you to complete your one-time paper work formalities to avail continued advisory support. Dear Vidya, Do the funds maintain separate portfolios for Dividend option and Growth option or is forex trading dublin just Accounting jugglery.

How far is this correct. I always thought the Dividend option requires a different approach for stock selection as against the Growth option. There are separate NAV accounts maintained for growth and dividend as they have to delcare NAVs separately.

But if youa re talking about portfolios, the issue does not arise learning about forex there is one portfolio for 1 scheme.

The idea of dividend is simply to strip to gains made from managing a portfolio and give it back to you; whereas the same gain is retained and reinvested in the market in case of growth. For you, the gain made is on your NAV, dividend or growth as the case may be. The underlying stocks, are the same, as they ought to be.

Can you throw some light on the newly introduced Bonus option in Mutual Funds? Can you explain in detailtheir Tax efficiencyHow the bonus is give etc…. Would be helpful if you can explain how is returns caculated for growth plan. If you opt for dividend plan, then only dividends are declared. If you opt for growth plan, dividends will not be declared and the NAV grows much faster than the dividend plan. It is similar to the cumulative and interest payout option in Bank FD.

In cumulative option, you earn interest for the principal and get back the accrued interest and principal on maturity. In interest payout option, you withdraw the interest year on year and take back the capital on maturity. Hi, I want to invest in SIP for long term for my newly born baby. My motto is to accumulate money till the age if 18 years for his higher studies.

I will not withdraw any amount from fund. Sandeep, for fund specific advice, you will need to write to us using your FundsIndia account. We will be glad to help you. The blog is only a general discussion forum. Broadly, for such long term, you should consider equity funds. I am planning to invest in a mutual fund Growth.

Correct me if I am wrong, now in the growth fund, basically the dividends if issued is reinvested in the fund automatically. I am not aware of any lock-in period. Also what is the difference between a regular expense ratio and direct ratio?

There are no dividends declared in growth scheme what youa re talking of is dividend reinvest. The gains simply accumulate in your NAV. Direct mode implies investing directly through the AMC without a distributor. The difference in NAV is not as high as you mention but yes the NAV of the direct plan will be higher since there is no distribution fee involved int he expense ratio.

The expense ratio is lower for direct since this component is not there. If you do not need any hand holding with funds, know where to invest and when to drop an underperformer and do not mind using multiple login to invest with multiple AMCs and invest through multiple portals, you can consider direct plan. Thanks for your response Vidya.

So is dividend-reinvest the same as growth scheme since it appears that they just leave the dividends and let it compound and grow? I was reading somewhere about dividend reinvest that the NAV value comes down when dividend is paid. My understanding of a dividend reinvesting is described in the following example: Let say I buy shares for Rs Each Rs 1.

Now I get a dividend of Rs. Later the price for each share is Rs 2 and now my value has increased from Rs to Rs But from what I read it says that my overall NAV value will be adjusted.

My confusion is why should NAV value decrease if I get a dividend? The NAV value may increase or decrease regardless of dividends paid out right? Hello Suresh, A dividend of Rs 10 does not mean 10 units of MFs.

Let us assume you get Re 1 per unit as dividend not Rs 10 you assumedthe equivalent units based on the NAV will be allotted. For instance,in this case Rs 1 of dividend X Rs is Rs Instead of paying your Rs this Rs will be reinvested at the prevailing NAV by giving you equivalent units. These units will be added. However, the Re 1 of dividend given to you will be reduced from NAV.

To put it simply. As I udnerstand DDT will not be applicable on equity funds? So is it correct to say that the div. As a proof, he showed me the listed returns of a few funds for both and they are same if not identical. Do you agree with the above viewpoints? Any idea why dividend option gives the same returns though it is given out after subtracting DDT?

Hello HAri, the DDT of That is the difference. As for returns, most websites do not differentiate the returns between growth and dividend and show returns adjusted for the dividend payout that is inclusive of dividend. Otherwise, given that the dividend paid out no longer enjoys compounding unless you diligently invest itusually growth returns are marginally higher, especially over long time frames of 5 years and above.

My point of asking is that the net returns before applying income tax seem to be the same in both cases, or is it an illusion created by incorrect reporting? I see you are saying that most websites are not differentiating them, so they are probably just reporting for the growth option, but do you know of a site that does report them differently?

Hari, I think the returns captured are the same. You would have to check with those websites. You may want to check on that. I use this article as a reference and come back to it from time to time, so I hope you have a way to edit it and keep it up to date or republish it when there are significant updates? I just it again and have a couple of items as feedback: Based on the date of article, it is most likelybut I am not sure if you already updated it for any changes since then.

I think right about there you are switching from equity funds to debt funds, right? Hello Hari, The date of publication is mentioned in each blog. View this as you would view any other article online in any publication like ET or Mint. Constant updates on blogs written 2 years ago is difficult; we do it when we are able to keep track of such articles.

We do have tags for you to search on similar topics we have written later in the blog. This is very useful articles. I have a question.

I am planning to invest lump sum SBI Ultra Short Term Debt Fund or a similar fund. I need money on monthly basis so that I am planning to opt for dividend option. If the dividend is paid monthly, are there any tax to be paid on the dividend? Another fund that I am thinking to invest again for dividend only, is sbi magum gilt fundshort term plan.

Please let me know. Hello Sundararajan, Yes, dividend suffers tax called dividend distribution tax which the AMC pays by deducting it from your NAV. So you are the one to actually bear the tax. In case of investment in ELSS MFs with Growth Option, do the investor get benefit of 80 C in respect of the investments made by the fund of the amount which otherwise would have been accrued as Dividend.

Hi vidya your articles are interesting. I want to make investment of for long term. Hello Sir, Sorry for the delayed reply. Portfolio recommendations can be done only through your FundsIndia account if you are an investor with us. We are constrained from advicing through public forums. Hello Amritanshu, you should close your eyes and go for growth option Only then will you allow your money to compound and grow for the long term.

I wanted to understand one thing regarding the dividend payouts. I want to know if I redeem the units as on today, how is the dividend calculated for the period from the payout of last dividend and the day when I sell the units?

Do I get paid dividend for this period say between March and August? How does it work? Hi Shah, Sorry for the delayed response. Dividend is not for any period at all. It is paid at the discretion of the fund house based on the surplus they have on the NAV. They can declare any amount as they please. When you sell the units you will not get any dividend simply because you sell them. Whatever gain is in the NAV will come to you on sale.

Is the income from Money Market Dividend Fund is taxable? Which type of Dividend Funds are most profitable? Yogesh, all dividends from debt funds suffer DDT. There is not such thign as profitable dividend fund.

Dividend is only a way to distrbute the profits ina debt fund. There are different categories of debt funds. One can choose the same based on time frame. How is this possible? Hello Sir, the yields of gilts eased and caused a price rally. It is not sustainable over long periods.

My son is 4 month old. I am confused should I invest in any child plan or any mutual fund through SIP. Please suggest child Plan or Mutual fund for 18 to 22 years. Mohit, kindly avoid insurance based products as it is hard for you to exit them if performance is poor. For mutual funds, if you are a FundsIndia investor, please write to us using the advisor appointment feature in your dashboard and we will help you build a portfolio for your child.

Else, register and activate your account with us. It is a free account. I invested in elss… In 5 days amount decreased to …. I am in loss or not?? Should I draw my money???

I am worried please help…. Sir, We cannot comment without knowing which fund but please note that equity funds are for the long term and ELSS has 3 year lock in. The market fell sharply during the US results and your fund may have reacted. I am a new Investor and was looking to invest in ELSS. I have a question: I want to start SIP from Aprilhowever, for this year FY, I am planning to invest lump sum.

Do I have an option of Investing lump sum for one year and starting SIP only In April Ajay, of course you can do it. If it is online, it is easier.

If it is offline, there will be separate paper work. Hi Narendra, For any queries regarding your portfolio, kindly do get in tough with your advisor from FundsIndia. Hi vidiya I am new to mutual fund and have no idea about it at all. I just opened a mutual fund in SBI Magnum MIP growth option 3 months ago. Now what should I do and how will I get back profits? When I opened it I just said quarterly. Will I get my profits in my bank account directly?

Until then, they will stay with your fund. Since you are saying quarterly, it may be a dividend option. Please note the fund is under no compulsion to declare dividends. Hello vidya, Last week i invested Rs 1 lakh lumpsum in icici pru balanced fund growth.

But was cofused and invested full amunt in 1 fund. I can take risk u can suggest me some good equity funds. Hello Sanjay, Sorry for the delayed reply. I am constrained from making any individual recommendations on the blog. Vidya-ji, I had invested a lumpsum or rather parked some savings in ICICI Pru Flexible Income — Daily Dividend Fund sometime in May There is a daily dividend credit that gets added on reinvested i reckon in the fund.

I withdrew a good part of the monies later in the same month for another PMS investment. Could you kindly advise if the total daily dividends that accrued in the fund are taxable and if yes would they be STCG or LTCG?

Hence, you need not pay any separate tax on dividend income paid out. If you had opted for daily dividend reinvstment which has anyway come to you by way of units there is no income there. If you have gains on the units sold including units from Div.

Have started SIP of 5k in ICICI Pru LTEF-Growth since June and now immediately need funds for some personal emergency. Can I stop the SIP and withdraw the amount. How much would I be paid and what will the tax implications. As ELSS lock-in period is 3 yrs does this impact or MF will continue? Hello Hemanth, Sorry for the delayed response. You cannot exit ELSS funds before the 3-year lock-in. You can stop fresh SIPs. That will just leave you with lower tax savings and not hurt existing investments.

Pls clarify that if there is any tax on dividend paid out by equity funds equity oriented balanced fund even if it starts within one year of investment. Please note that there is no dividend distribution tax on equity funds irrespective of the time frame. All non equity funds carry a dividend distribution tax. If you are investing for the long term, please go with the growth option and allow your money to compound.

Email will not be published required. Notify me of follow-up comments by email.

Notify me of new posts by email. Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund, or designing a portfolio that suits your needs. Wealth India Financial Services Pvt. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the reliance of its product or related services.

Terms and conditions of the website are applicable. INB ARN - Marketplace - FundsIndia Official blog of FundsIndia. Mutual funds Features Equities Insurance Recommendations General Advisory Personal finance Data Simply Important. Should you choose the dividend option or the growth option?

By Vidya Bala on March 15, in AdvisoryMutual funds. Your investment time frame, cash flow needs and tax bracket will decide whether you should go for dividend or growth options. Save Tax Upto 1. Get FundsIndia's articles delivered straight to your inbox! Enter your email address to get: Mutual fund recommendations from experts Buy, hold or sell calls for stocks Investment tips and tricks All the latest news from FundsIndia.

Twitter Facebook Reddit Google More Email LinkedIn. How To Trade When Price is at a Turn-Zone? Birla Sun Life Medium Term Plan. Shishir March 15, at 4: Prefer growth, [End of Quote] Pls correct me if I am wrong. Hope, I have been able to put across my perception properly. Vidya Bala March 15, at 5: A switch to the growth option is also possible but only after lock-in period. Shishir March 15, at 5: Ankush March 18, at Hi, I am a live example of the same. Vidya Bala March 18, at Vidya Bala October 9, at 2: Bhalchandra Murhar May 9, at 4: Is it possible to switch from Dividend reinvestment option to Growth.

Vidya Bala May 19, at SRR March 29, at 7: Manshu March 15, at 4: Great post as usual Vidya. Investing some lumpsum amount in a liquid fund for next months. Vidya Bala March 15, at 9: That was a long story Tks, Vidya Reply. Thanks Vidya, that was a superb explanation. Tejaswi July 2, at 1: Hello Vidya, Thanks for the superb explanation. Now I see the difference.

投资学Chap_百度文库

Maybe I need to restructure my STPs now. Pain in the ass. Dear Vidya, Very nice article. Vidya Bala March 15, at That and your response to Apoorv is quite useful. Ganesh March 16, at 2: Vidya, This is a very good set of information that you have thrown out there!

Karthick March 17, at Hi Vidya, This is related to Debt Funds which you have explained in this blog. Vidya Bala March 17, at 4: Karthick March 18, at Many Thanks Karthick Reply. Hari March 18, at Hi Vidya, Great article, as always. Unless my math is wrong, in which case I should be very much obliged if you would correct it Reply. Mahesh August 27, at 8: Hi Vidya, I love this blog. So, let me give you a very practical example: I believe it was a very long post but it puts all such doubts at rest with a real world example.

Vidya Bala August 29, at 2: Hello sir, Thank you for visiting the blog and for your detailed post. Mahesh August 30, at 8: Vidya Bala August 30, at 8: Vidya Bala March 27, at Vidya Bala March 27, at 3: Shilpi March 28, at 4: Hi Vidya, very nice n interesting post.

Vidya Bala March 28, at 9: Gunjan April 2, at Vidya Bala April 2, at 1: You have not mentioned what tax bracket you fall under.

We will explain for all 3 rates. Gunjan April 2, at 2: Vidya Bala April 2, at 4: Sharma April 7, at 3: Vidya Bala April 7, at 9: Ram April 25, at 7: Vidya Bala April 26, at 9: Hello Ram, It is good that you have set yourself a time frame.

Thanks Vidya, the website ask to much of info for creating account and hence below details and appreciate your inputs: Vidya Bala April 26, at Hello Ram, I understand your predicament. Neminath May 7, at 2: Vidya Bala May 8, at Ramesh June 3, at 9: Hi Vidya, I want to invest 5 laks into Liquid fund for months time which I need for downpayment of my house.

Please could you advise in both cases which one is better for me. Vidya Bala June 3, at Vidya Bala June 7, at Gopalan June 24, at 9: Vidya Bala June 25, at 2: Hi Gopalan, Your observation about ELSS not performing any better than regular diversified funds is true.

Rajasekaran July 3, at 1: Hi Vidya It has been a great experience in reading your explanations to the vast number of queries, which also provoke me into contributing my two paisa worth thought.

Snehal July 5, at 6: Hello Vidya, Very informative post! Kindly add in your value added suggestions below! Thanks in adv Rgds Snehal Reply. Vidya Bala July 5, at 8: Himanshi July 8, at 9: Vidya Bala July 8, at Snehal July 9, at 9: Hello Vidya, Thanks for the reply and very sorted explanation! Kindly suggest alternative options. Thnx in advance Rgds, Snehal Reply.

Vidya Bala July 9, at Snehal July 9, at 1: Thanks a lot Vidya! Arun July 23, at 1: Hello Mam I have invested in brila and uti dividend yeild fund in dividend reinvestment option of Rs in each fund for one time i am 28 now and as i do business i will not be able to do SIP my query is that is both these funds enough to generate a target of 50 lakhs when i turn 60 years old.

Thanks in advance Reply. Vidya Bala July 24, at Kartik August 9, at Sandeep Kini September 8, at 8: Hi Vidya, Do all Ultra Short Term Debt funds have Dividend Reinvestment option? Vidya Bala September 9, at Vidya Bala September 25, at 1: Hello Mr Raja, I think you may have misunderstood the concept of annualised return in mutual funds.

Does it mean it is the Average return for all 3 yrs or i raja Reply. Vidya Bala September 25, at 2: Hari October 16, at 6: BTW, I am different Hari than the one commented some time back Reply. Vidya Bala October 16, at 8: Hari October 17, at 2: Sorry, I should have been more clear. Vidya Bala October 23, at 2: Arun October 24, at 3: Hi VidyaPls explain me whether large cap scrips and A group scrips are one and the same?

Pls clarify my doubts. Vidya Bala October 25, at Abhijeet December 28, at 3: Hi VidyaI have savings of almost K in my savings account which i will require in coming months for my higher studies.

Vidya Bala December 31, at ARORA February 23, at 6: Dear Vidya, I read with interest some of the posts. What is the difference and comparison of Growth Vs Flexi options. Thanks in anticipation D. Vidya Bala February 26, at 1: Hello Sir, Thank you for reading the blog and writing here. Vidya Bala March 11, at Hello Sir, I am forwarding your query to one of our advisors.