Growth vs dividend

[Shivam DUbey]

Can anyone tell me what are the values in front of growth and dividend options and why such a huge difference and in some mutual funds such as Quantum long term equity fund the difference is very less and in some theres a gap of 40 - 50 points between dividend and growth?

 

[TT2011]

If there is big gap between dividend and growth plan means that company gives regular dividend than where there is no or very less gap.

There is tax on dividend that company pays to govt. So better go with growth. You will earn more with growth. If you need money just sell few units.

 

[5paisa]

Can anyone tell me what are the values in front of growth and dividend options and why such a huge difference and in some mutual funds such as Quantum long term equity fund the difference is very less and in some theres a gap of 40 - 50 points between dividend and growth?

Most of the times there is no difference. Differences arises whenever the funds have regular dividend payouts. In such cases, income tax is levied on the dividend return, so the fund value is lesser than its growth counterpart.

 

[Shivam DUbey]

@5paisa @TT2011 this clears my doubt.

 

[travi]

Most of the times there is no difference. Differences arises whenever the funds have regular dividend payouts. In such cases, income tax is levied on the dividend return, so the fund value is lesser than its growth counterpart.

It is not income tax that is levied (else you would be eligible for TDS against it), it is DDT or Dividend Dist, Tax before payout that is levied there by making the tax liability NIL on the Dividend rec'd.
@Shivam DUbey the cumulative DDT+surcharge+cess (& any other tax) is roughly 30% which makes it ideal for ppl who are already in the 30% IT Bracket bcos it doesn't make much of a difference.
If you are in a lower IT bracket, might as well go for Growth and bear the Tax liability. The difference in tax will be your net gain.