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Investing/Strategies / Retirement Investing
|Subject: Re: Dividend Distributions and 401K||Date: 12/23/1999 2:35 PM|
|Author: TMFPixy||Number: 16816 of 81359|
<<Yes, all this unit value side of the equation works fine unless the price of the shares of portfolio of mutual fund changes.>>
You're still missing the point. The unit or share value is determined by the underlying market value of the plan's holdings. If your shares holdings are worth $1,100 currently, then whether you hold 110 shares at $10 each or 100 shares at $1,100 makes no difference. Now say the plan's holdings drop in value so your share of that plan is only worth $1,000. Whether you got the dividends in extra shares or in unit value won't affect what happens to you because of that drop. In both cases the share value will decline. If you hold 110 shares, they are now worth $9.0909 each. If you hold 100 shares, they're worth $10. In both cases, your share of plan assets is still worth $1,000. The same works in reverse when the plan's holdings go up in value.
I truly fail to see your hangup here.
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