Tax saving Mutual Funds? Dividend or Growth Option?
There are Plethora of options available while investing in Mutual Funds. One important question while investing in Tax saving MF (ELSS) is Which option to choose. Dividend Pay out or Dividend Re investment or Growth option.
ELSS has mandatory three years lock-in period. Even though MF are for long term, if you perceive the market will go down for next one year, you have no option of taking your money. In this scenario, the Fund Manger also has no option to return part of your fund if you have chosen Growth option. If you select Dividend Pay out option, If the fund manger perceive the investment climate is not ideal for staying in the market, he may return part of your fund through Dividend pay out. Remember this is for only for Equity Linked Saving Schemes (ELSS) which has mandatory 3 years lock in period.
ELSS has mandatory three years lock-in period. Even though MF are for long term, if you perceive the market will go down for next one year, you have no option of taking your money. In this scenario, the Fund Manger also has no option to return part of your fund if you have chosen Growth option. If you select Dividend Pay out option, If the fund manger perceive the investment climate is not ideal for staying in the market, he may return part of your fund through Dividend pay out. Remember this is for only for Equity Linked Saving Schemes (ELSS) which has mandatory 3 years lock in period.
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