I was about to purchase a FZROX, but I realized that the dividends aren’t paid until the December of every year. This prevents me from using the dividends earned to be reinvested to earn more shares of the index fund.
With a traditional index fund, I would be paid the dividend four times a year, and with Fidelity, I would be able to reinvest the dividends earned to ultimately earn more dividends.
Obviously, the amount return from a dividend would be dependent on the cash amount of index fund purchased. So, if I had, say, $15,000 in my money management account with index funds, would the quarterly compounded reinvestment outweigh the expense ratio from having a traditional index fund? Or, would I be better off financially not paying an expense ratio but also not take advantage of reinvesting the quarterly earned dividend I’d get otherwise?
Submitted July 04, 2020 at 09:19PM by upennwharton24 https://ift.tt/38vjk0M
