I want to buy some mutual funds now but I remember hearing something about taxes mutual funds pay. So I will get hit with that bill right? Is there a better or worse time of year to buy mutual funds?
2006-12-06 02:28:28 · 7 answers · asked by Marcus N 1 in Business & Finance ➔ Investing
The best time is always January 1st. This allows for the maximum amount of growth that year.
Regarding your question about distributions: Most mutual fund companies will make taxable distributions to their shareholders in December (you'd need to contact each fund to find out exactly what their policy is). Lots of folks wait until after the fund has made this distribution to invest as to avoid the taxable distribution.
2006-12-06 03:42:36 · answer #1 · answered by derek 4 · 0⤊ 0⤋
That is something to discuss with your tax preparer. There are taxes that are due from the trading that mutual funds do with their money. Rarely are they capital gains taxes, which requires an investment being held for a year or more, so profits from trades are done at your personal income rates. Mutual funds then declare the per share taxible amounts in statements sent you in January. It is possible that holding mutual fund shares in December could get you on the declaration list for a year's worth of profit-taking, but you will need to take your fund prospectus to the tax preparer and see what the consequences might be for you. If your fund purchases are part of a qualified retirement account, such as an IRA, you probably don't have anything to worry about (unless your income runs over a threshold amount to qualify for a tax deferred contribution that year).
2006-12-06 02:40:28 · answer #2 · answered by Rabbit 7 · 0⤊ 0⤋
Right about now is the time to buy. Most have gone x dividend already. You are correct that prior to the mutual funds going x dividend in not a good time to buy. But after they go x dividend, which happens in late November or early December, they there are no future dividend until the following December.
So now is a good time to stock up, but I would do so sparingly. The economy may be in for a somewhat rough ride next year.
2006-12-06 02:35:02 · answer #3 · answered by Anonymous · 1⤊ 1⤋
It may not make much difference, depending on the fund, however it's a worthwhile thing to research anyway. You want to avoid buying them just before they make capital gains distributions in order to minimize your tax burden--you don't want to pay for gains on something that you didn't own! That will vary with the particular fund, but they should be able to tell you their distribution calendar. December is a popular time for funds to pay distributions.
2006-12-06 02:35:59 · answer #4 · answered by moto 3 · 1⤊ 0⤋
Invest early and often. The more you invest, the more time you have for your money to grow.
If you are using an IRA account, then there is never a bad time. If you are using a "non-qualified" account and need to pay taxes on dividends each year, I would recommend not getting started until January (this year), but continue investing throughout the year.
2006-12-06 04:24:55 · answer #5 · answered by MR MONEY 3 · 0⤊ 1⤋
January after annual payout time best unless you have a capital loss to work off. Watch out on some of these other answers. Not on track.
2006-12-06 04:30:21 · answer #6 · answered by vegas_iwish 5 · 0⤊ 0⤋
Never. Mutual funds are bad news. When you buy them, you do not own any assets. You own a piece of a company that buys and sells assets. The best thing to do is own actual stocks.
2006-12-06 02:33:35 · answer #7 · answered by GOPneedsarealconservative 4 · 0⤊ 8⤋