SIP from dividend - Q & A Forum

Q & A Forum › Category: Investments › SIP from dividend

Dipa asked 9 years ago

Hello sir, somewhere i got the idea about doing SIP from dividend we get from mutual fund. so here is the answer i have got : Choose the mutual fund option which give Dividend go for monthly dividend. Now by investing that dividend in monthly SIP in different fund Such as Franklin, Aditiya Birla, DSP Blackrock etc. So at the end of the day your invested money will be also growing along with your SIP. What is your opinion on this? Should we try this ?

5 Answers

0 Vote Up Vote Down

Sreekanth Staff answered 9 years ago

Hi, So, the end result of this process is that such dividend income (money) is again re-invested in Growth Schemes via SIPs. I believe that there is no need to implement such plan/strategy. You may keep the things just short & simple. Opt for Growth scheme via SIPs of good consistently performing Equity funds and remain invested for longer period.

0 Vote Up Vote Down

Dipa answered 9 years ago

But if we are investing the lump sum then doesn't this work well? If we Invest lump sum in any single fund then we are depended on single fund. But by this monthly dividend options we are reinvesting dividend on equity based SIP ?

0 Vote Up Vote Down

Sreekanth Staff answered 9 years ago

Hi, You may invest the amount in multiple funds, why only single fund? Also, STP can be a good option as well.

0 Vote Up Vote Down

Dipa answered 9 years ago

But isn't that in STP when we setup we have the exit load? And the tax on STCG? I am not saying single fund its just the idea we can set up 3 4 funds with monthly dividend and start SIPs based on that..? Also wanted to ask are these dividends taxable?

0 Vote Up Vote Down

Sreekanth Staff answered 9 years ago

Hi, Dividends are not taxable in the hands of investors, but mutual fund companies have to pay DDT and then distribute the balance dividend to the unit holders.