We have a saying that "eggs lay the foundation, eggs lay the foundation". A fund is a fund.
As we all know, there are two basic forms of fund dividends, one is cash dividends; The other is dividend reinvestment. Dividend reinvestment refers to the direct use of the fund's dividend and the purchase of the fund according to the net value on the equity registration date. Financial experts vividly compare this dividend payment method to "laying the foundation with eggs". Under normal circumstances, the default dividend method of most funds is cash dividend, and investors can choose flexibly according to investment demand and market environment.
Bull market is a favorable condition for choosing dividend reinvestment. Dividends are directly converted into fund shares, which can keep more fund shares in the bull market, thus sharing the capital appreciation brought by the bull market. However, in a bear market, cash dividends have become a better choice. But also can reduce the cost of purchasing funds. Dividend reinvestment is to reinvest investors' cash income in the fund and convert it into a corresponding number of fund shares, without paying subscription fees and saving time and cost. This is a form of reinvestment that saves money, time and energy.