Mutual funds allow individual investors to achieve a level of investment diversity not typically available without a significant financial commitment. With a relatively low initial investment, investors can use mutual funds to gain exposure to stocks, bonds and cash. However, while funds are managed by investment professionals, many funds underperform. Fortunately, the process for selling mutual fund shares is straightforward.
Obtain a copy of the prospectus that was provided when the mutual fund shares were originally purchased. The prospectus contains information about the fee structure for the mutual fund and will help with calculating the cost of getting rid of the mutual fund shares.
Review the prospectus to determine if the mutual fund shares are back-end load shares. If the shares purchased are back-end load shares, a fee will be assessed when the shares are sold. The prospectus will contain a breakdown of how the fee will be calculated.
Determine if capital gains taxes will be due upon the sell of the shares. Capital gains will be due if the sale price of the shares exceeds the cost of purchase including any fees paid.
Review the total cost of selling the mutual fund shares to determine if it makes financial sense to get rid of the mutual fund. If so, sell the shares using the same brokerage service used to purchase the shares.
Items you will need
- Fund Prospectus
- A copy of the fund's prospectus can be obtained from the fund's website or from the broker who originally sold the shares.
- Consult with the brokerage used to confirm the method used to calculate the value of the shares. Some brokerages use the value of the shares at the close of the markets as opposed to at the moment the shares are sold.
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