Can I avoid paying annual mutual fund expenses by selling the mutual fund before the annual fee charged or am I charged the fee during the sale?
2007-07-13 11:46:25 · 8 answers · asked by sam 1 in Business & Finance ➔ Investing
No, this is not a good strategy. Most mutual funds require that you hold the funds for a certain length of time, like 90 days. If you sell before then you will be charge a penalty. Also, as mentioned above, the management fee is prorated thoughout the year. This is to avoid the daytraders from getting in to the funds.
Another consideration is taxes. When you sell, you will have to pay capital gains taxes. The idea of mutuals, is to hold for the long term, and sell when you are in alower tax bracket, i.e., after retirement; or need the money for something important.
If you're going to be in and out, based on market and economic considerations, then you should consider ETFs. With these, you get a basket of stocks in a specific sector or index, and have diversification, but can sell them like individual stocks.
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2007-07-13 13:15:16 · answer #1 · answered by SWH 6 · 3⤊ 1⤋
The annual expense ratio refers to the percentage that they take from you over a period of a year. However, these costs are ALREADY factored into the NAV of the fund shares, spreading this cost among all 365 days (or 366 days in a leap year). The name NAV (Net Asset Value) implies that it has already factored in the Liabilities (costs). Assets - Liabilities = Net Assets.
You're already paying these costs right now. Right now, as you read my words. And then, when you read the next post, you will continue to pay these costs. You will pay them every single day you hold mutual fund shares.
The better method is to pick low cost funds from the start. If you just stick with http://www.vanguard.com for all your non-employer investing, you'll never have to worry about high costs.
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Did you really think you could outsmart a multi-billion dollar industry?
2007-07-13 18:50:00 · answer #2 · answered by derobake 4 · 1⤊ 1⤋
If you bought A shares you already paid. If you B or C shares, you will pay part of the cdsc(sales charge) depending on how long you held the fund. If you could elaborate on how long and the type of shares you have, I would be able to give you a better answer.
2007-07-13 11:55:39 · answer #3 · answered by Yisrael Chai 3 · 0⤊ 0⤋
Let me think...if you got in a taxi and asked the driver to take you three miles away...could you avoid paying by getting out at two and a half ?? How about a plane ride?
Geeez, you get in, ask people to move things around so you make good returns...then you don't want to pay?
... do you hold up the line at the supermarket with expired coupons, too?
2007-07-13 15:18:25 · answer #4 · answered by jebediabartlett 6 · 1⤊ 0⤋
if you are being charged mutual fund fees, then you need to get out of that family and go into vanguard or fidelity...look up both of these families, they are fantastic and charge next to nothing
2007-07-14 05:10:11 · answer #5 · answered by zioncanyon 3 · 0⤊ 0⤋
No. If you hold the fund for less than a year, you still get charged fees and expenses on a pro rata basis.
2007-07-13 11:54:25 · answer #6 · answered by NC 7 · 2⤊ 1⤋
Annual fees are charged daily. They thought of your trick.
2007-07-13 15:14:57 · answer #7 · answered by Anonymous · 1⤊ 0⤋
1) Investors are too apathetic and complacent with their money 2) Move your mutual fund account to Fidelity or Vanguard.
2016-05-17 06:06:33 · answer #8 · answered by ? 3 · 0⤊ 0⤋