Updated on March 18, 2023
In the Growth option of mutual funds, the profits made by the scheme are re-invested in the scheme and not paid out to investors. The re-invested profits help in earning further profits as compounding starts working and gives returns on the capital as well as the profits earned. Investors with long term goals can easily plan their investible amount through the Growth option, keeping in mind their targets and future goals.
What are the features of Growth Option?
Features of Growth Option are:
1 The portfolio of growth and dividend options are the same.
2. When a fund manager books profits, these are re-invested in the scheme.
3 The Net Asset Value (NAV) of the growth option is higher than the dividend option because the re-invested profits grow in value over time.
What are the benefits of Growth Option?
Benefits of Growth Option are:
1. Growth option lets compounding work its magic over the long term and the returns can be substantial
2. It brings better tax efficiency and tax is levied only on redemption