I’ve been investing in HDFC Taxsaver dividend payout plan for the last 2 years. I want to know if the dividend payout plan is a good option compared to a growth plan for the long-term.
-Yogesh
Generally speaking, any investment in equity should be cumulative. You should not try to derive income from it because you effectively eat into your own capital. Hence, for most equity investments, including tax-saving funds, one should keep investing and look beyond at least 3 years.
However, if you're a marginal investor, struggling to make your tax-saving investment and this periodic payout coming in the form of dividends can ease your cash flow, then by all means go for the dividend plan if it helps.
This article was originally published on April 18, 2012.
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