|
FMP-Dividend or Growth |
|
|
|
|
Should one go in for dividend or growth in FMPs? |
|
|
Re: FMP-Dividend or Growth |
|
|
|
|
FMP-Growth better because it has compounding power
(M)9417652336 |
|
|
Re: FMP-Dividend or Growth |
|
|
|
|
Abhi
|
| 18 October 2008, 21:19:02 |
|
Growth is better because of compounding and it is recomended most for FMP term more than 1 year with indexation. |
|
|
Re: FMP-Dividend or Growth |
|
|
|
|
|
Amal
|
| 23 October 2008, 07:17:15 |
|
Sir, the point here is to consider taxation.
While in the other case (equities)growth would be a better option as wealth creation will be the objective and nothing works more effeciently than the POWER OF COMPOUNDING, but again it depends on an individual prespective (if you have no other option of earnings left and you depend on regular inflows from investments then dividend pay out should be the option)
In debt funds (less then a year)a short term capital gain would be the result giving effect being taxed at the higher rate. Here dividend would be better this is tax-free at the hands of an investor( as a dividend distribution tax is already paid by the MF this rate is much lower then that you would pay if you are directly being assessed)
In the longer term you have both the options one above and
You have an option of indexation where in you would be able to factor in the inflation and pay capital gains on the residual amount. the simple idea is to factor in as many aprils your fmp is passing thru and you would have that many indexation example an 18 month Fmp invested in oct will allow you double indexation as by the time your money is comming out you would have factored in two aprils. Thus you would have two years inflation adjusted on a 18 month investment thus effectively you would pay a lower tax since the taxable gain would be smaller.
Trying to make it more simple as technicalities would confuse you. Hope you would be clear in the prespective. if not please post back the query i will help you out. |
|
|
Re: FMP-Dividend or Growth |
|
|
|
|
Before investing in any type of financial instruments one should be very candid about his future goals. without pre detemined goals nothing can be said about anything in financial planning. for long run one sould invest in equity and balanced funds. for short run ie. 3 to 10 months one should opt for FMP , if the market is higly volatile and banks FDs are giving less than indicative yeilds.
Arvind Thakur
ARN-49611
Mob. 9817040604 |
|
|
|
