When To Sell Mutual Funds
Mutual funds can be an excellent investment for average people because they offer professional management and fewer risks.
Unfortunately these vehicles have risks and can lose money.
Many people have seen a large portion of their retirement savings disappear because they did not know when to sell their mutual funds.
Unfortunately there is no easy answer to the question of when to sell shares in a fund.
Every fund and every investor is different but there are certain situations in which it will be advantageous to sell funds.
Any investor should have no problem learning when to spot such situation and take advantage of them.
When the Fund is No Longer Making Money The first and most obvious time to sell your shares is when the fund is no longer making money for you.
An investor should be able to tell this by monitoring the fund's performance and by comparing that performance with the fees.
It is fairly easy to track the performance of most funds through free internet portals such as Google Finance and Yahoo Finance.
You can also track funds through financial newspapers such as The Wall Street Journal and their websites.
Simply look to see if the fund is performing to your expectations and track returns over monthly and yearly timeframes.
You do not need to monitor your funds everyday but you should check them about once a month.
You can tell if the fund is making money by figuring out its costs and fees which will be listed in the fund prospectus.
Simply write down all the costs and fees and add them up and subtract them from the return you are getting on the fund.
If the fees and costs exceed the return then you are not making money and you should sell the fund.
When it is not Achieving Your Investment Objectives Before you invest money you should sit down and figure out what your investment objectives are.
An example of such an objective could be to generate a rate of return that exceeds inflation or to increase my retirement savings by 5% a year.
You should take a look at those objectives every year then revisit your investments.
You should sit down examine the investments and see if they are helping you meet your objectives.
Look at mutual funds to see if their returns are meeting your goals.
If they are not you should sell them and look for others that are.
If a fund is not generating enough additional income to meet your objectives you should definitely think of selling it.
When a Fund's Return can not Beat the Rate of Inflation The standard rate of inflation is around 5% therefore any investment needs a return of at least 6% to beat it.
A vehicle like a mutual fund should have a rate of return around 10% in order to make money in spite of inflation.
Always check funds to see if they are making such a return.
If they are not you should sell them and look elsewhere.
Something to remember is that mutual funds are a fairly high risk investment.
The gain you are taking you should justify the risk you are taking.
If the return is not around 10%, the risks you are taking and the fees you are paying are probably not worth it.
Unfortunately these vehicles have risks and can lose money.
Many people have seen a large portion of their retirement savings disappear because they did not know when to sell their mutual funds.
Unfortunately there is no easy answer to the question of when to sell shares in a fund.
Every fund and every investor is different but there are certain situations in which it will be advantageous to sell funds.
Any investor should have no problem learning when to spot such situation and take advantage of them.
When the Fund is No Longer Making Money The first and most obvious time to sell your shares is when the fund is no longer making money for you.
An investor should be able to tell this by monitoring the fund's performance and by comparing that performance with the fees.
It is fairly easy to track the performance of most funds through free internet portals such as Google Finance and Yahoo Finance.
You can also track funds through financial newspapers such as The Wall Street Journal and their websites.
Simply look to see if the fund is performing to your expectations and track returns over monthly and yearly timeframes.
You do not need to monitor your funds everyday but you should check them about once a month.
You can tell if the fund is making money by figuring out its costs and fees which will be listed in the fund prospectus.
Simply write down all the costs and fees and add them up and subtract them from the return you are getting on the fund.
If the fees and costs exceed the return then you are not making money and you should sell the fund.
When it is not Achieving Your Investment Objectives Before you invest money you should sit down and figure out what your investment objectives are.
An example of such an objective could be to generate a rate of return that exceeds inflation or to increase my retirement savings by 5% a year.
You should take a look at those objectives every year then revisit your investments.
You should sit down examine the investments and see if they are helping you meet your objectives.
Look at mutual funds to see if their returns are meeting your goals.
If they are not you should sell them and look for others that are.
If a fund is not generating enough additional income to meet your objectives you should definitely think of selling it.
When a Fund's Return can not Beat the Rate of Inflation The standard rate of inflation is around 5% therefore any investment needs a return of at least 6% to beat it.
A vehicle like a mutual fund should have a rate of return around 10% in order to make money in spite of inflation.
Always check funds to see if they are making such a return.
If they are not you should sell them and look elsewhere.
Something to remember is that mutual funds are a fairly high risk investment.
The gain you are taking you should justify the risk you are taking.
If the return is not around 10%, the risks you are taking and the fees you are paying are probably not worth it.
