InvestorQ : Why is growth option different from the dividend reinvestment option & How are stock dividends gets adjusted in the growth option of MF?
ramya Bhaskaran made post

Why is growth option different from the dividend reinvestment option & How are stock dividends gets adjusted in the growth option of MF?

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Isha Tharwani answered.
2 years ago
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Growth Option: 
Growth option of Mutual Fund means an option where neither dividend is paid by the companies, re-invested nor any bonus units are issued to the investor. Under this plan, the NAV of per-unit is increased to the extent of growth made by the company.
The growth option cannot be suitable for those who want to receive regular cash payouts from their investments. However, it is a way to maximize the NAV of the fund and upon the sale of these units, one shall realize a higher capital gain on the actual number of shares purchased. This is because whatever dividend is paid out on this investment has been used by the investment companies to invest in more stocks and grow the money of the client. 

Re-investment Plan:
Under this plan, the dividend that is declared on the investment is re-invested. It means fund managers buy more units with the amount of dividend received at the prevailing NAV as on the date of reinvestment. Every time an investor receives the dividend, it is not credited to him, jut re-invested with the prior permission of the client. Fund managers re-invest the dividend received in the same scheme from which it is received.  
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