What are the different investment
plans that Mutual Funds offer?
The term 'investment plans' generally refers to the services
that the funds provide to investors offering different ways to invest or
reinvest. The different investment plans are an important consideration in the
investment decision, because they determine the flexibility available to the
investor. Some of the
Investment plans offered by mutual funds in India are:
Growth
Plan and Dividend Plan
A growth plan is a plan under a scheme wherein the returns
from investments are reinvested and very few income distributions, if any, are made.
The investor thus only realizes capital appreciation on the investment. Under
the dividend plan, income is distributed from time to time. This plan is ideal
to those investors requiring regular income.
Dividend
Reinvestment Plan
Dividend plans of schemes carry an additional option for
reinvestment of income distribution. This is referred to as the dividend
reinvestment plan. Under this plan, dividends declared by a fun dare reinvested
in the scheme on behalf of the investor, thus increasing the number of units held
by the investors.
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