In case of fund dividend, you can choose two ways to distribute the dividend, the first is dividend reinvestment, and the second is cash dividend. Dividend reinvestment means that dividend-paying funds automatically purchase this fund; Cash dividend is to take out the dividend funds and put them in a bag safely.

Dividends sound like a good thing. In fact, fund dividends are not as good as you think. Fund dividends are eligible funds. Part of the total investment of the Fund is converted into cash and distributed to the original holders of the Fund. After the dividend, the net value of the fund will decrease, and the reduced amount is the dividend amount allocated to you. The more dividends, the more the net value decreases. So the total amount of funds you hold, that is, your assets, has not changed before and after dividends.

Look at the dividend method.

Dividend reinvestment is to increase the holding share of the original fund and keep rolling. No subscription fee will be charged for the reinvested dividend. If you are optimistic about this fund, you should choose the dividend reinvestment method.

Cash dividends are basically equivalent to manual redemption of some funds. If you need to adjust your strategy or need cash, you can choose cash dividends.

Dividend method is not chosen when the fund is facing dividends, but when you apply for this fund for the first time. The default dividend method is generally cash dividend. When buying a fund, you can't choose the dividend method at that time. If you want to modify the dividend distribution method, you can select the fund in the details of the fund you hold and then modify it.

Fund companies generally encourage investors to continue investing, so the default dividend method is dividend reinvestment, allowing investors to change the dividend method at any time.

Investors don't need to do any manual work when they encounter fund dividends.

Dividend is not a particularly important issue in fund investment. For long-term investors, dividend reinvestment is undoubtedly a better choice.