The dividend reinvestment of the Fund can choose cash dividend. If we choose cash dividend, we will get a sum of money, which is our dividend. If we say that after dividends, our position cost is actually reduced accordingly, which can help us control the investment cost very effectively, but we can also choose to reinvest with dividends. If we choose dividend reinvestment, we will find that our investment cost will be reduced accordingly, because we have obtained more funds with the same investment amount.
After the dividend is reinvested, we have to calculate the cost of our position. Generally speaking, our position cost refers to the principal we pay divided by the fund share we get. After the dividend was invested, we paid the same principal but got a higher share. Naturally, our position cost has been reduced. When the cost of our position is reduced, the risks we need to face will also be reduced to some extent.
Many partners want to reinvest after redeeming their investment funds, which is actually a kind of income reinvestment. We can choose to redeem when the market falls. We hold most of the shares in the fund and then reinvest the proceeds. At this time, it can effectively reduce the cost of our positions, which is also a kind of income. While investing, it can also reduce costs to a certain extent, but this will test investors' understanding of the market. If our knowledge of the market is just the opposite, we will sell most of the stocks when the market is about to go up, causing us to miss a lot of gains. At the same time, if we invest, we may be trapped by chasing high.
Therefore, the fund's income reinvestment refers to dividend reinvestment. Under normal circumstances, after the fund pays dividends, we choose to exchange these dividends for shares, which reduces the cost of holding positions when investing. Because we pay the same money, we get more shares. Therefore, reinvesting with good returns can help us get higher returns as much as possible and take higher risks at the same time.