Have you bought any mutual funds this year or late last year while the market was doing its skyrocket thing? Last year it was hard to lose money. This year it has been easy.
You should be calling your mutual fund (they all have 800 numbers) to find out if and when they plan to pay their capital gains and dividends. You might say to yourself, they won't be paying anything this year because the fund is selling for less now than it did at the beginning of the year. Think again. It is very probable that the mutual fund manager took profits on many high flyers that he bought cheap last year. According to the way funds are set up those profits are taxable to holders of the mutual fund and not to the fund itself.
It is possible you bought a fund at $40 per share that is now selling at $30 per share and be hit with a 25% capital gains distribution of $10. On paper you now have a $10 per share loss and a tax bill based on the $10 per share distribution. That is adding injury to insult.
With this as a possible scenario it might be prudent to sell your fund for less than you paid for it. You should work the numbers with your accountant to see if this might reduce your tax bill. But you have to do it now. You can't wait until after the mutual fund declares its capital gains distribution. This is especially true if you have purchased any high tech or international funds during the past year. You can carry losses forward to next year to offset against profits and distributions next year.
The greatest numbers of mutual funds declare these distributions near the end of the year, usually starting in November with most of them in December. The rumors I hear are that the distributions will be early this year because of the poor performance of the majority of funds.
This applies to everyone who does not have a tax shelter of some kind such as a 401k, IRA, SEP or other similar investment vehicle.
One piece of advice I want you to heed. Don't buy any mutual funds now because they are "cheap". Wait until after they declare their capital gains and dividend distributions. You could be whacked with a big tax bill.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
http://www.mutualfundmagic.com; 1-888-345-7870
recurring maid service Wilmette ..We all know the expression, "My country, right or wrong",... Read More
What does it mean to short a stock?This means that... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
The Winter Games for the Olympics are coming up soon... Read More
One of the great "secrets" of successful people is discipline... Read More
A few years back ? it seems like an eternity... Read More
After some forty years of banking and investments, I retired... Read More
Is really not as important as to how you invest... Read More
Let me start by saying that...Most online brokers do not... Read More
Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More
Maximizing a stock market investmentThere are several factors an investor... Read More
I feel that an investment strategy in the stock market... Read More
Every day I see in the financial section of newspapers... Read More
How can you dispel an illusion unless you look directly... Read More
If you want one.And I don't recommend any broker with... Read More
You should ignore analysts on TV, the radio, the newspaper... Read More
Among the largest forces that affect stock prices are inflation,... Read More
There are so many kinds of work that needs to... Read More
Ever have one of those sample boxes of candy? Each... Read More
It is wonderful to be alive in the information age.... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
How many times has this happened to you? You're at... Read More
One of the most believed bits of conventional wisdom from... Read More
Let's hope you did not have any of the Enron... Read More
One of the things people are always asking me is... Read More
last minute cleaning help Highland Park ..When it comes to 401k's there is an overabundance of... Read More
The fight continues to rage among traders who use technical... Read More
Sometimes the best way of lowering exposure to risk is... Read More
For years I have been saying you must have a... Read More
This article describes the model of a natural relationship between... Read More
All stock trading and investing methods must deal with the... Read More
After finding the price of a particular stock, usually the... Read More
One Saturday morning, while he was sitting at his computer... Read More
With all the bad news that has been dumped upon... Read More
There are so many kinds of work that needs to... Read More
Well, not really. What I mean is I don't mind... Read More
Just about now everyone is confused as to which way... Read More
Every day I see in the financial section of newspapers... Read More
Mutual funds were created with the idea that one person... Read More
Minority Report the movie may not be far off if... Read More
Sidney felt sick as she looked at her latest OptionsXpress... Read More
Professional stock options traders use the term lean to refer... Read More
Dollar cost averaging is one of the most popular ideas... Read More
It has been said that low cost or even free... Read More
Being wrong is OK, but let's not carry it to... Read More
I have a 2-car garage. There are nice shelves on... Read More
Every day on CNBC-TV they show a 200-day moving average... Read More
Someday you may want to retire and continue to live... Read More
TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More
Checked your 401K lately? Going back to about a year... Read More
Stocks & Mutual Fund |