Mutual fund is designed for a longer term investment mostly. Fund company discourage investor buy and sell mutual fund in a short period of time. Fund company impose these two restrictions to limit trading Mutual fund or called "Market timing." I want you to watch out before you invest in any mutual fund because most mutual fund company never mention in their " highlight summary" and most of us never pay attention to them. At least I didn't.
1) redemption fee. If you buy and sell within a certain period of time (from 7 days to 90 days depends on your fund), they could deduct a penalty (up to 2%) from your sell transaction.
2)trading block. The fund company could prohibit you to repurchase the fund after you sold within in a certain period of time (again depending on your fund 's policy)
My advice, check if the fund you're interested to buy has these limitations before you buy. Otherwise, you will be punished just like I was when I sold a mutual fund within 90 days at a loss AND get beat up by another 2% for redemption fee :( Learn from my mistake!
Tuesday, August 28, 2007
Watch out if you trade Mutual Fund
Posted by 529pm @ 9:22 PM
Labels: Mutual Fund, Stock
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4 comments:
Thanks, that's informative.
Also, you should look out for various fees such as the management fee, 12b-1('marketing') fee, purchase fee an various other hidden fees that can eat up your profit quicker than it builds.
those information is kind of making sense, but at an entry level stock trader, i think it is still confused to me.
but how do you compare the earning between common stock and mutual fund?
yeap! uwo. that's why i'm not a big fans of Mutual Fund in general.
i'd say start with stock to gain an experience on it first before jump to mutual fund.
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