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Originally Posted by Stu from NYC
Interesting but a question. If fund is doing well (and you do not need funds for current expenses) why not reinvest capital gains and dividends? Especially since interest rates are pitifully low right now.
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It's a personal choice. I like to know exactly how many shares I have all the time, and my cost basis. It makes monitoring my investments more structured. I can always go online and purchase additional shares by just doing an online transfer from my money market account back to the mutual fund. With the automatic reinvestment feature, you get no advanced warning about how many shares they are buying for you or the amount. So, you may be automatically buying shares in one mutual fund, when it may make more sense to buy shares in a different fund. The reinvestment purchase option is too automatic. I prefer to do it manually and control the timing of share purchases.