Mutual fund schemes broadly give you two choices which are the Growth Plan and Dividend Plan. So, while the underlying portfolio of both the Dividend Plan and Growth Plan is exactly the same, the difference is in how the returns earned by the mutual fund scheme are used in both these plans. In the dividend option, profits made by the mutual fund schemes are paid out to you at certain intervals. SEBI changed the term “Dividend Option” in mutual funds to “IDCW” in April 2021. On the other hand, in the Growth Plan of a Mutual Fund scheme, the returns made by the mutual fund scheme get reinvested. As returns are reinvested, you may earn returns on return and thereby benefit from the Power of Compounding.

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Disclaimer: These are not any recommendations for any funds or stocks and are meant only for educational purposes.

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