Investing in mutual funds is not rocket science.
But, there are more options that the popular lump sum investment route &
systematic investment plan (SIP).
1. Dividend transfer plan..!
As the name suggests, here the dividend you earn
on a scheme can be transferred to purchase units of another scheme. Not all
schemes allow this option.
2. How it works..!
Fund
houses set a minimum dividend amount that can be transferred, if the dividend
that your scheme earns is less than that minimum amount, the dividend is
reinvested into the scheme itself.
Unlike a typical systematic transfer plan (STP),
where you decide the amount, here you do not know the amount of dividend your
fund will declare. It could be even be only 1 to 3 times a year.
3. Why dividend transfer plan..!
This
option works for those who want to be safe with their investments, for low-risk
investors. They can invest in a debt fund, and have the dividends transferred
into an equity fund.
This strategy gives equity exposure to your money, even as you maintain the safety of your capital amount.
