So how to choose?

To understand this problem, we must understand what is fund dividend.

? What is fund dividend?

Official: Distribute some fund income to investors in cash. The total assets of the fund remain unchanged before and after dividends!

I believe many friends have read this official explanation, but they just don't understand why the total assets have not changed, and my Yu 'ebao has also received cash dividends!

In fact, I have been puzzled for two years for this problem! I didn't fully understand it until yesterday!

In fact, it is to give you the income in recent days! For example, the fund will generally announce dividends a few days in advance, and generally freeze the income in advance! ! (I don't quite understand how long it will be frozen, anyway, it will freeze your income and not show it on the books), so you sometimes wonder why the fund doesn't update its income sometimes! The total assets after dividends are the total assets you saw on the day of the latest freeze update! !

This is what my friends often say. Yesterday, the total assets of my fund were 1 1,000 yuan. After the bonus, it's still 1, 000 yuan! I won the 20 yuan Prize for nothing!

Now everyone knows that this part of the dividend is part of the net value of the fund unit. When wool comes out of sheep, it is to turn some fund assets into cash. How much cash dividends investors get will reduce the fund assets accordingly, and the corresponding income will not change because of cash dividends.

Fund dividends generally need to meet the following conditions:

1, the current income is positive. (Look, it must be positive income to get dividends.)

The current income is enough to make up for the previous losses.

3. Dividends can only be paid to the remaining distributable profits that make up for previous losses.

When will the fund pay dividends?

1, dividends are paid to the point.

When the fund meets the income distribution conditions agreed in the fund contract, it will pay dividends.

For example, the distributable profit of each fund share is greater than a certain amount; The net growth rate of fund share exceeds a certain index or a certain proportion; The net value of fund shares exceeds a certain amount, etc.

2. Dividend regularly

At the time agreed in the fund contract, if the income distribution conditions are met, dividends will be paid, such as every six months, every quarter or at the end of each month.

? Dividend rules for different types of funds

1, closed-end fund

Under the conditions, the profit distribution shall not be less than once a year, and the profit distribution ratio shall not be less than 90% of the annual distributable profit of the fund. Dividends are generally paid in cash.

2. Open fund

According to the regulations, the maximum number of annual profit distribution and the minimum proportion of fund profit distribution are stipulated in the fund contract.

Dividends of open-end funds include cash dividends and dividend reinvestment.

3. Monetary Fund

Money market funds are quoted at daily face value, and it is generally agreed that the income distribution method is dividend reinvestment.

Money market funds usually use "ten thousand shares" and "seven-day annualized rate of return" to measure the profit distribution of money funds.

Why should the fund pay dividends?

You may feel strange that since I share my income, I don't want to sell it? Why pay dividends? Why should I do something that is of no practical benefit to me personally?

For fund managers: after the fund pays dividends, the net value of the fund will fall. Many fund newcomers will understand the net value of the fund as the concept of stock price. When selecting funds, they will exclude high net worth funds and like to buy low net worth funds. Therefore, the net value of the fund decreases after dividends, which is conducive to selling the fund. (Generally, the net value of the fund will be maintained at around 1 yuan through dividends and splitting. )

In addition, dividends are equivalent to "forcing" investors to redeem some fund assets, and fund managers can achieve the purpose of "lightening positions" in disguise. Fund managers can reduce their positions by increasing dividends and returning some funds to investors without fully grasping the market.

For investors, there are two ways of fund dividend: cash dividend and dividend reinvestment. Cash dividends are paid to us in cash, and this part of the money is considered as "passive" redemption, and no redemption fee is required.

Dividend reinvestment is to convert dividends into fund shares to continue additional investment, and this part of fund shares does not charge subscription fees.

Therefore, according to different market conditions, reasonable adjustment of dividend distribution methods can avoid certain rates for our investors.

So do you choose cash dividend or dividend reinvestment?

Sub-scenario:

When you make a fixed investment, you must choose to reinvest in dividends, otherwise your fixed investment means diversification, continuous trading, and still have benefits!

A. In the same way, when you are optimistic for a long time and the stock market as a whole rises, you must also choose dividends to reinvest!

B. You can choose cash dividends for one-time purchase, so that you can passively redeem the income on a regular basis!

C. Choosing cash dividends when the market falls for a long time can avoid risks! And there is no redemption fee!

D. buy long-term closed-end funds and choose cash dividends to get benefits in advance!

Remarks: There is no handling fee for dividends or reinvestment!