Can the fund dividend be reinvested?
Fund managers encourage investors to invest more, so there is generally no charge for dividend reinvestment. If investors want to invest more after receiving cash dividends, they will be regarded as new subscriptions and need to pay subscription fees. Therefore, choosing dividend reinvestment is conducive to reducing the cost of investors, and dividends can also be operated like buying individual stocks.
Long-term investment in open-end funds, if you choose dividend reinvestment, you can enjoy the compound interest growth effect of fund investment appreciation. For example, an open-end fund pays a dividend of 5% every year, and chooses to reinvest the dividend. After 10, the capital will increase to 62.89%; However, if we choose the same expected annualized expected return, the capital will only increase by 50% after 10, and the expected annualized expected return will decrease by 12.89%. If the investment time is longer, the difference will be even greater.
Precautions:
(1) In the bull market, we should learn to treat the dividend behavior of the fund relatively dialectically, because if the fund pays dividends in cash, if the position in hand is insufficient, it is necessary to sell stocks to raise cash, which will inevitably have an impact on the later operation; Moreover, it is good to keep soaring if there is no net dividend in the bull market.
② In terms of capital utilization efficiency, cash has actually been kicked out of the fiery capital market, losing its primary value of "chasing high". In the face of a magnificent bull market, it is definitely a wise choice to reinvest the dividends when the fund pays dividends.