Mutual Fund Options – Growth option

Growth option is similar to Dividend reinvest option except tax implications. You need to consider long term capital gain tax while choosing growth option whereas you need to consider dividend distribution tax for dividend reinvest option. In absence of these taxes both of the options yield same returns.

One more important difference you observe is after the dividend ex-date in case of dividend reinvest option the number of units will be high whereas in case of growth option NAV will be high. However, investment amount will be same in both the cases.

November 29, 2009 | Filed Under Mutual Funds | Leave a Comment

Mutual Fund Options - Dividend Reinvest

If you opt for Dividend Reinvest, whenever the fund announces dividend it will not be paid to your account but you will get additional units for the dividend amount. If you don’t need intermediate payments you can go for this option. If dividend distribution tax is not there it’s better when compared to growth option.

NAV is separately calculated for dividend options (Dividend payout and Dividend reinvest) and growth options.

Let’s say, Fund A with unit face value Rs 10 and NAV Rs 80 announces a dividend of 60% on face value and you hold 1000 units of this fund.

Your investment value before dividend announcement = Rs 80 * 1000 = Rs 80,000

November 29, 2009 | Filed Under Mutual Funds | Leave a Comment

Mutual Fund Options - Dividend Payout

Mutual Fund companies distribute the profits to their unit holders in the form of dividend similar to companies to their share holders. While choosing a mutual fund scheme you can opt for one of the below options

Dividend Payout
Dividend Reinvest
Growth

If you opt for Dividend Payout, whenever the fund announces dividend you will get paid. Funds announce dividend as a percentage of the face value. If you give your bank account details and opt for ECS, the amount will be credited automatically to your bank account. In this case the NAV (Net Asset Value) value will come down proportionately. Read more

November 29, 2009 | Filed Under Mutual Funds | Leave a Comment

RBI to ask Dubai Exposure - Indian Companies exposure

RBI deputy governor Shyamala Gopinath in Ahmedabad said that RBI would ask all the banks about their exposure in Dubai World, a state owned cash barren Investment Company.

L&T announced that it had 20 -25 Million Dollar exposure to Dubai. Punjlloyd, DLF, Unitech said that they didn’t have any exposure to Dubai and BoB(Bank of Baroda) said that it had small banking exposure. Read more

November 27, 2009 | Filed Under Market Outlook | Leave a Comment

Ramalinga Raju in Hall of Shame

Forbes put Satyam’s (Now Mahindra Satyam) founder-Ramalinga Raju in ‘World’s 10 most outrageous CEOs’ list. The ill-famed Raju is at the 4th place in the Hall of Shame list for 2009. Forbes is best known for its rankings for world’s richest and most powerful persons. It also announces most infamous persons.

In January this year Raju announced that he had inflated the company’s performance figures and showed fictitious employees of more than 10,000. Investigations revealed that he had stolen a lot of investors’ money in the country’s first ever financial scandal of its kind.

November 27, 2009 | Filed Under Market Outlook | Leave a Comment