Go for Dividend Mutual Funds over Growth Mutual Funds

Searching Google for Recent dividend declared in mutual fund or Dividend paying mutual funds your are right place. My suggestion is read this post completely, clarify your doubts and then take your call. If your a beginner check out my previous post of Mutual Funds:

1. Mutual Fund Sahi Hai ?
2. How to select Best Mutual Fund ?

These posts will help you have better knowledge of Mutual Funds and their selection, then just a random walk into multiple funds. Now lets get to the topic.

Before selecting Dividend Mutual Funds, you must understand Dividend.

Equity Dividend vs Mutual Fund Dividend

Equity dividend is a payment of reward made by a corporation to its shareholders from a portion of company's earnings and is paid to a class of its shareholders.When a corporation earns a profit or surplus, the corporation can either re-invest the profit in the business or pay dividend or do both by paying only a proportion of the profit as a dividend to shareholders and re-investing the rest. Dividends are decided and managed by the company's board of directors and requires shareholders approvals.

Whereas, Mutual Fund Dividend wait... are you assuming is collection of dividend for shares within its portfolio and distributing it to you. You are not completely wrong, mutual fund dividend is distribution of certain amount from funds (usually profits) or gains by selling the shares at a price higher than its purchased price. Incase, of growth option they are added to NAV of the funds. 

Points to remember before investing in Dividend Mutual Funds:

1. Mutual fund dividend is like booking profits after certain duration. 
2. As mutual fund dividend impacts funds NAV. Profit booking might look good in bull market but, it can impact your principle invested in bear market. 
3. Some funds have dividend option on mercy of their fund managers while others have dividend option after fix duration. Typically, fix duration dividend funds can be risky in bear market.
4. After introduction of DDT in mutual funds, you loss benefit of saving CG till permissible limit. 
5. Equity Dividend and Mutual Fund Dividend are not same.

Who should invest in Dividend Mutual Funds:

1. Constant Profit Booker - If your someone who like to book constant profits in shares by paying 15% STCG. 
2. Kal Ho Na Ho - If your someone who like to see notification of Amount Deposited in Your Account now over compounding effect after many years in future. 
3. Unfriend Broker - Equity transaction can lead to lot of brokerage. In Mutual Funds, it all inclusive in TER.
4. Market Timer - It is observed that some fund manager distribute dividend only when markets are inflated. This funds can help you time the market to certain extend. 

Are You Watching Closely - Anonymous Fund Manager

Finally a tweet from my unknown Twitter friend: @TheMFGuy1 😉