Do interest paying funds affect your capital?

If I invest Rs 10 lakh in HDFC Balanced Advantage Fund, it is giving me monthly interest. Is this reducing my capital base or will the capital also appreciate? - Anonymous You are most likely referring to the income distribution cum capital withdrawal (IDCW) plan of the fund which was earlier named (misleadingly though) as dividend plans. The revised nomenclature now accurately refers to what happens to your investment in such plans - they pay you a certain sum of money (which you referred to as "interest") from your own deployed capital plus whatever appreciation or depreciation it may have had as per the fund's performance. Here's how it works For example, if you invest Rs 10,00,000 in an IDCW fund plan wi

This article was originally published on January 10, 2023.