How do you make money in a Mutual Fund? There are three ways in which you can make money in a Mutual Fund First you can earn a dividend from the Mutual Fund. Most Debt Funds declare dividends around once in six months in their Dividend Option. If you do not want the dividend, you can choose to be in the Cumulative Option. When a dividend is declared, the NAV of the units will fall, since dividend is paid out of the appreciation in the value of the unit Next, you can make a profit by selling the mutual fund units at a price higher than that at which you bought them. This is capital gain. (If you sell the units at a lower price, you make a capital loss.) Finally, the value of the units you hold can appreciate. This is unrealised capital gain. Dividends and capital gains are treated differently
Posted on: Sat, 15 Jun 2013 05:51:50 +0000
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