Investing in a Growth or Dividend mutual fund can be a confusing decision.
Both of these funds have their own advantages and disadvantages, and deciding which is a better fit will almost always depend on your individual needs and circumstances.
Growth Mutual Fund
In growth mutual funds, profits made by the fund are ploughed back into the fund.
Hence, the net asset value of the fund increases over time compounding your principal.
Dividend Mutual Fund
In dividend mutual funds, the profits made by the fund are distributed to the unit holders from time to time.
Dividend funds should be chosen if there is an expectation of periodic income from your investment without actually redeeming any of the units.