Checked the auto-reinvest box without thinking about it
I've got a small position in a pooled fund, about 2k, and it pays out quarterly. Last payment was $41. When I signed up there was a checkbox for automatic reinvestment and I ticked it because it seemed tidy.
Now I'm looking at it again and I can see two ways to think about it and I don't know which one is the grown-up answer.
Reinvesting means the $41 goes back in and compounds instead of sitting in my checking account getting spent on nothing in particular. At my size the distributions are too small to do anything else with, and a bank transfer for $41 feels silly.
Taking the cash means I actually see the money, which sounds soft, but there's something behind it. My whole reason for starting small was to learn what this thing does. If every dollar goes straight back in, I never find out whether the cash actually shows up on time, and I can't tell a good quarter from a bad one because the balance just goes up either way. Also I've read that reinvested money can be subject to a new lockup depending on how the fund is set up, which would mean my money keeps getting less available while I'm not paying attention.
So which is it for a first position, compound it or watch it? Vote and tell me if I'm missing a third option.
First small position in a pooled fund, distributions in the first year:
16 votes