2. Dividend reinvestment is to convert dividends into fund shares and hit your own fund shares. If it is a short-term investment, you can choose cash dividend if you want to pay dividends.
Generally speaking, it is more appropriate to choose cash dividend when the stock market falls unilaterally. If you invest for a long time, it is recommended to choose dividend reinvestment. In this way, you can get free fund shares, which is equal to free subscription of fund shares.
Extended data:
With the release of the new fund issued by the regulatory authorities, the circulation of the new fund is10 billion yuan, which makes the old fund feel great pressure. In the face of increasingly fierce competition, the old funds have launched the marketing strategy of continuous dividend, competing with the new funds for customer resources in the fund boom.
Dividend-sharing funds can appropriately reduce the unit net value to 1 yuan, which can satisfy the psychology of some new investors to buy low-priced funds and win more customers. At the same time, the old fund can still increase its scale through re-marketing after dividends, make up for the asymmetry of investment demand caused by insufficient funds after dividends, and provide more incremental funds for the stock market.
At the same time, most investors have the symptoms of "fear of heights". When buying funds, they are often very sensitive to price factors and are unwilling to buy funds with higher net worth. The main reason is that "the net value of the fund is high, it feels too expensive and the investment risk is high". After the fund pays dividends, the original portfolio has not been greatly affected, and the fund manager has not changed. It can also compete with low-net-worth funds at the same level.
Baidu Encyclopedia-Fund Cash Dividends
Baidu Encyclopedia-Dividend Transfer to Capital Increase