I am trying to understand if it’s worth waiting till the day before distribution to purchase or right after distribution. Or is it better to wait until December to invest.
Thank you in advance.
2007-03-13 10:51:15 · 6 answers · asked by J 3 in Business & Finance ➔ Investing
It's a zero balance. Distribution of dividends will result in a lower net asset value. Whether you automatically reinvest or take payment, your value hasn't really changed. If you intend to take payment and sell the mutual fund immediately thereafter, be wary of "early redemption" fees.
2007-03-13 10:59:02 · answer #1 · answered by Third Son of Marianne 3 · 1⤊ 0⤋
The day after a distribution the price of the mutual fund is going to go down by the amount of the distribution so there's no money to be made.
Taxes are another issue though. In a taxable account, you want to wait until after a distribution has been made. Otherwise you'll make an investment and then receive a distribution (you could invest on Monday and receive a distribution on Tuesday) and while the distribution is really just you getting your money back you'll have to pay taxes on the distribution.
2007-03-13 11:05:58 · answer #2 · answered by Box815 3 · 2⤊ 0⤋
I'm a long term investor so I don't even look at those dates. I buy when the price is right and hold until I don't like the stock or fund anymore.
I know there are people out there that buy and sell based on the dividend dates of stocks. However, if you don't hold a stock for a year, you're paying short term capital gains so I personally can't see that the dividend is going to make up for the taxes they get hit with.
That's just me though. I invest. When I decide I want a stock, I buy it. No matter if they've just issued a dividend or are just about to. I'm more interested in long term gains.
2007-03-13 11:00:35 · answer #3 · answered by Faye H 6 · 0⤊ 0⤋
It is not a zero balance if you have to pay taxes on the distribution. So it doesn't matter in a 401k, or IRA. But in a taxable account, distributions are usually in December so {I have read in several places} from October on, wait until at least late December, after the distribution so you don't have to pay taxes on dividends "you didn't earn."
2007-03-13 11:08:15 · answer #4 · answered by gosh137 6 · 1⤊ 0⤋
It's silly, because it will make no difference to how much you end up with in the long run, so you are just making work for yourself! The effect on a fund's NAV is already "priced in" to the fact a dividend/capital gains distribution is about to be paid out. Look at a chart carefully and you will see this for yourself!
Don't work so hard! (Unless you just like it!)
2007-03-13 11:13:30 · answer #5 · answered by Anonymous · 0⤊ 0⤋
in case you think of you may make money "paying for the dividend" you're fallacious. not purely will the fee of the mutual fund bypass down by using the quantity of the dividend, yet now many money will charge you greater suitable expenses for short term "flipping."
2016-12-18 12:51:30 · answer #6 · answered by mijarez 4 · 0⤊ 0⤋