Dividend! - NOT a real earning actually

Dividend! - NOT a real earning actually..Owh!? What does it means?

This is a truth that most of the unit trust consultant won't tell you, even no one will tell me but i discovered it myself. In my previous post, i 'partially-mistakenly' describe we can earn money from unit trust in two ways. But actually, that's only one way which is capital appreciation.

WHY?! This is because the so-called dividend is actually our own money! ( Actually, Public Mutual call it distribution instead of dividend because it distributes some portion of our money back to us)

HOW?! Now i am gonna tell you an ultimate truth. Each time a dividend distribution/Ex-dividend is declared, the price of that fund will drop in the almost same percentage of the dividend.

For example, on 1/4/10 Public Mutual declare dividend distribution for two funds, namely Public Aggressive growth fund and Public Regular Saving Fund with 8 cent per unit and 4.5 cent per unit respectively. BUT at the same time, both of the funds dropped 9.80% and 6.65% respectively.

  

So actually they are balancing up. No one will lose money. This is a common phenomenon, it happens in all funds  and stocks.

I WAS CHEATED then! No, you lost nothing here, as long as your fund is good, the percentage that 'lost' will recovered back in a very short time. Plus, you already got your 'dividend'. Furthermore, just a suggestion trick, enter more money into the market when the price drop!