I wanted to ask a few questions regarding Index funds and its dividends. The questions are the following:
If I decided to invest 10k into an Index fund and contribute monthly around 100-200 and decide to reinvest the dividends over a period let's say 30 years, how exactly would I be able to access/withdraw this money when I am finished investing in this fund. Do I need to sell the Index fund? do I transfer the money I made from the fund into my bank account/savings account or do I need to do something else?
Is it better to deposit any dividends into a into a tax free savings account like an ISA(UK) and contribute monthly payments to the Index fund rather than reinvesting the dividends. For example let's say I start with 10k in an Index fund and contribute around 100-200 a month into the fund and any dividends I make get automatically deposited into my savings account. So in essence the Index fund will increase monthly due to the contributions and any dividends will be deposited into a savings account. Is this approach sensible.
If i reinvest dividends back into an Index fund, how exactly will any savings account be filled up if the dividends are automatically reinvesting into the fund.
I have read several books on Index funds and have gotten a good grasp on it, however I am confused with the whole dividend aspect of things. I just need to know which approach would be most suitable.