When is it time to unload a mutual fund? When is it prudent to stick with a poor performing fund? Certified Financial Planner Paul Fain has FIVE year-end house-cleaning tips for your mutual fund investments this week on WBIR.
PAUL, WHY DO INVESTORS STICK WITH LOUSY FUNDS?
- “It was good to me once.” If you would not buy it again today, stop hanging on.
- “I’m waiting to get back to break-even.” You may recover losses faster by selling out and buying a new fund.
UNDER-PERFORMANCE CAN REALLY IMPACT THE BOTTOM LINE OVER MANY YEARS RIGHT?
- “It’s really not so bad.” Settling for disappointment has consequences; a percentage point or two over long stretches of time makes a real difference over a lifetime of investing.
- “I don’t want to pay the taxes.” Sticking with a bad fund will take more out of your returns in the long run than Uncle Sam’s cut.
HOW DO FUND COMPANIES TRY TO KEEP INVESTORS IN A BAD FUND?
- “It has new management.” A new manager may be reason to stick around — for 12 to 18 months.
FAST MARKET FACT: Screening a mutual fund.
Picking Mutual Fund Winners:
- Performance
- Price
- Process
- People
QUESTION FOR OUR MONEYMAN?
Want to learn more about mutual fund selection? Do you have other general questions about financial planning or investing? Send your questions to our Knoxville Certified financial planner Paul Fain or directly to Paul@assetplanningcorp.com!
