Mutual Fund: What is Dividend Transfer Plan means ? - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
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Friday, November 04, 2016

Mutual Fund: What is Dividend Transfer Plan means ?


Investing in mutual funds is not rocket science. But, there are more options that the popular lump sum investment route & systematic investment plan (SIP).

1. Dividend transfer plan..!
As the name suggests, here the dividend you earn on a scheme can be transferred to purchase units of another scheme. Not all schemes allow this option.

2. How it works..!
 Fund houses set a minimum dividend amount that can be transferred, if the dividend that your scheme earns is less than that minimum amount, the dividend is reinvested into the scheme itself.

Unlike a typical systematic transfer plan (STP), where you decide the amount, here you do not know the amount of dividend your fund will declare. It could be even be only 1 to 3 times a year.

3. Why dividend transfer plan..!
 This option works for those who want to be safe with their investments, for low-risk investors. They can invest in a debt fund, and have the dividends transferred into an equity fund.

This strategy gives equity exposure to your money, even as you maintain the safety of your capital amount. 
Mutual Fund: What is Dividend Transfer Plan means ? Reviewed by S. Chitra on November 04, 2016 Rating: 5 Investing in mutual funds is not rocket science. But, there are more options that the popular lump sum investment route & systematic ...

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