Index funds - accumulation v income

[BeccaBean]

I wondered if anyone can help me understand the difference between these. I have S&S ISAs all currently invested in accumulation index funds but expect to need to withdraw from these in around four years. Should I be switching some to income funds and once you have the "income" what happens to it is your isa? Is it actually cash? Thanks

Yes, the income is paid out in cash. Accumulation funds automatically re-invest any dividends issued by the companies the fund invests in. Income funds will pay them out as cash into your account.

So if you want to leave your money invested but draw a regular income from it, then you would choose an income fund. If you don't need the regular income you'd put it in an accumulation fund and your investment would grow faster.

If you don't need to withdraw from your funds for 4 years, then leave them in an accumulation fund. When you do need to withdraw, it's just a question of whether you want an automatic monthly income, or you want to periodically sell off some of your investment. If it's all in ISA it's all income and capital gains tax free, so just a question of how much you want and how often.

@oldwhyno Got it! Many thanks.