Cash dividend method is a dividend method in which fund companies distribute part of fund income to fund investors in cash.

Dividend reinvestment method:

Dividend reinvestment is a way for fund investors to reinvest the cash dividends obtained from dividends in the fund to obtain fund shares.

First, how to choose the fund dividend method?

According to the provisions of the Measures for the Administration of the Operation of Securities Investment Funds, if the investor does not specify the dividend method, the default dividend method is cash dividend method.

In other words, the default dividend method of fund management companies is cash dividend. However, before the equity registration date, fund investors can go to the fund sales organization of the fund you purchased to select and modify the required dividend distribution method.

As we all know, the ultimate goal of any investment is to obtain investment income and increase the value of the invested funds. For investing in stocks, in order to get investment income, you can get cash by selling profitable stocks and keep it in your pocket; Buy stocks at an appropriate time, reinvest, or get cash through dividends from listed companies. For investing in securities investment funds, in order to obtain investment income, cash can be obtained by selling or redeeming fund shares with rising prices or increasing net worth, or investment returns can be obtained through dividends from fund companies.

Two, the way of fund dividends can be considered from the following points.

(a) the market situation, optimistic about market performance, then you can choose the way of dividend reinvestment; Be cautious about the performance of the market in the afternoon, then you can choose the way of cash dividend.

(2) according to the length of investment, I want to get a short-term opportunity, so cash dividend is more appropriate; If you are optimistic about the performance of a fund for a long time, especially about the long-term investment and research ability of a fund manager, then choosing dividend reinvestment can better accumulate shares.

The advantage of cash dividend is security, and the advantage of dividend reinvestment is that it can reduce the purchase cost of the fund, because the share of dividend reinvestment is directly sent to your account. If you buy this fund again, you need to buy a handling fee, but you don't need the share of dividend reinvestment.

It should be noted that no matter what kind of dividend distribution method, the income from fund dividend is a part of the net value of fund share, because the fund dividend itself does not create new wealth, and the net value of fund products will decrease accordingly after dividend distribution.