I will share three tips, although the growth option is generally better. The detailed answer will depend on your particular investment objective, current income (and hence income tax slab) and need for dividend income.
- If you don’t need income to flow form your investment, then go for growth. Doesn’t matter if it is equity fund or debt fund
- If you need income from debt fund, consider dividend distribution tax and compare it with your tax slab. If you are in highest tax slab, (30%+) go for dividend option.
- If you need income from equity fund, see if you can wait for 1 year and then do withdrawals (SWP). This will avoid dividend distribution tax on equity. The gain on equity has LTCG tax but it is likely to be lesser and you also have a 1 lakh exemption.
If your portfolio is 1x or 2x your annual income, hire an unbiased SEBI Regd Advisor to help you structure your portfolio.
