Each quarter the gains from a mutual fund are redistributed into the fund. Is that the best for a 21 yr old?

The gains from my mutual fund are redistributed into it each quarter. I am wondering if there is any benefit of taking the cash? taxes in CA? I am 21 yrs old and the money in there is not too important right now.

Why would you want the cash? Your goal is LONG TERM investment, correct? Ff so, do invest all your dividends. All our distributions/dividends reinvested into your mutual fund really adds up.

I'd take the cash only if you are very old and retired and you need the income.

Reinvesting the dividends and capital gains distributions is how compounding works. It allows your earnings to go on and make even more money. Earnings on earnings, so to speak.

Download my free book at http://www.invest-for-retirement.com and go straight to chapter 3 for a discussion on compound interest. It will make a lot more sense.

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