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When To Buy And Sell

“It is important to remember that you will never be able to always be in the number one mutual fund, and I definitely don’t recommend that you jump from fund to fund in search of large profits.”

- Allyson Lewis, author of
The Million Dollar Car and $250,000 Pizza

Most experts will advise you to select your mutual fund(s) carefully to meet your goals, and then hold onto them for the long term. However, the following are a few reasons why you may want to consider selling fund shares prematurely:

Change in Investment Strategy: If your fund manager suddenly starts buying up the latest “hot investments” without regard to the fund’s long-term objective or criteria regarding its holdings.

Change in Personal Objective: If your personal circumstances have changed, and it’s necessary to readjust your portfolio to meet your new goals. For example, as you grow older and approach retirement, if you have need for emergency cash, or if you begin earning significantly more income and need to find more tax-sheltered investments.

Change in Asset Allocation: Due to a substantially better performance in one asset class over another--such as the recent bull market in stocks--your portfolio's asset allocation may become lopsided. It may be wise to rebalance your mutual fund portfolio on a regular basis to maintain your original allocations among stocks, bonds, and cash.

Change in Management: If you originally purchased a fund because you liked the manager, you may want to consider selling if he or she leaves to manage a competitor fund. However, it’s a good idea to hold onto the original fund for at least 18 months to give the new manager a chance to prove him or herself.

Change in Policy: Should a fund adopt a policy that's not in your best interest, such as raising fees or changing the fund’s investment objective, it may be a good time to sell.

Change in Fund Size: Sometimes a fund may receive more assets than it has investment prospects, so the fund manager should close the fund to new investors. If not, the manager may be getting too greedy, and his securities selections may no longer measure up to previous standards.

 What is a Mutual Fund?

 Types of Mutual Funds


 How to Research Mutual Funds

 When to Buy and Sell


 Costs Associated with Mutual Funds

 Tax Issues




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