I recently discovered that I need to invest with my Roth IRA account and I have little investment knowledge. I was thinking of investing into the NASDX and I have very basic knowledge of what dividend reinvestment options are. My options are: capital gains and dividends, capital gains only, or cash. If someone could explain this to me I would greatly appreciate it.
In: 1
Cash: dividends paid by the fund are credited to your account.
Capital gains only: Capital gains paid by the fund are used to purchase additional shares of the fund (aka reinvested).
Capital gains and dividends: when the fund pays capital gains and dividends that income will be used to buy additional shares of the fund.
Unless you are really old, most would choose to reinvest both dividends and capital gains back into the fund.
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