Typical mutual funds include financial resources from multiple investors which are then used to purchase investment securities, such as bonds, stocks and short-term debts. They are usually managed by financial professionals in exchange for a management fee.
To take part in such a fund, you buy shares, which entitle you to some of the investments and the income they generate. So, you need to know how to buy and sell mutual funds.
Fidelity Mutual Funds: An Introduction
Fidelity Investments is an example of a financial services company that sells mutual funds as a product.
The Fidelity Investments section concerned with mutual funds houses different investment products across many asset classes, such as domestic equity, fixed-income and index funds among others. You can choose your preferred mutual fund schemes and begin to invest based on your financial goals, abilities and needs.
Read More: How to Join a Mutual Fund
When to Sell Mutual Funds
Before you decide to sell a mutual fund in a Fidelity account, you need to consider whether the time is right to do so. Having an exit strategy is helpful to enable you to determine if you are doing the correct thing.
Below are some of the triggers that may affect when to sell a mutual fund in a Fidelity account.
- Investors tend to invest while having a goal in mind. If you feel you have achieved that goal through your mutual fund portfolio, you can sell your shares and exit the fund.
- If you were happy with the investment manager who has been investing on your behalf and they leave the mutual fund company, you could consider leaving and going elsewhere. That is an option worth considering, especially if you are unhappy with the new management and feel their goals are unaligned with yours.
- If the mutual fund you are a shareholder of continues to underperform, you may be better off exiting it and channeling your monies toward more profitable ventures. And you could take advantage of any capital losses to offset your tax bill arising from capital gains and enjoy some tax breaks. According to the IRS, you can lower your income by up to $3,000 if you have net capital losses.
- When it’s time to rebalance your portfolio so that it continues to adhere to your asset allocation strategy, the choice to sell a mutual fund Fidelity investment makes a lot of sense.
- You should also consider it time to sell Fidelity mutual funds when the investment goals of the fund change. For example, when the portfolio managers start to take more risk than you can tolerate and you feel excessively exposed to the market, you can exit the fund.
- It makes sense to sell some of your mutual funds when you have a financial emergency and need a cash boost to deal with the situation you are facing. Considering that many Americans struggle to deal with financial emergencies, having the ability to liquidate mutual funds puts you in a much better financial state than most of your peers.
How to Sell Mutual Funds: Fidelity
Below are the steps you should take to sell a mutual fund in a Fidelity account.
- Ensure you are fully decided on your mutual fund exit strategy. If you are not sure, it would be wise to sleep on it.
- Log into your account on Fidelity.com.
- Choose the "Accounts & Trade" option and go to "Trade." If you have more than one account, select the account you want to deal with, before clicking "Trade Mutual Funds."
- If you want to buy another mutual fund with the money you make, choose the “Sell a Mutual Fund and use the proceeds to buy another mutual fund” option. Otherwise, choose the "Select My Bank Account (Fidelity Electronic Funds Transfer)" option in the "To" list and continue with the selling process.
- Click on the mutual fund sell option and specify the mutual fund you want to sell, and the quantity of your order in terms of shares or dollar amount. If you prefer, you can sell all your shares.
- Preview your order to ensure it is accurate.
- Click on "Place Order" if you are satisfied.
Read More: What Are the Functions of Mutual Funds?
To ensure you don’t pay any transaction fee, wait until you have held your mutual funds in Fidelity for at least 60 days before selling.
- Most Fidelity mutual funds charge a redemption fee. If you hold the fund for at least 180 days before selling you can avoid paying a fee for early redemption. This is something to keep in mind when buying new funds as well. If you plan to buy and sell funds often, carefully review the prospectus first to find out how much, if anything, transaction fees will cost you.
- Keep in mind that the amount you receive from the sale of your fund may be lower than the amount that was quoted in your Fidelity account before you placed your order. This is because fees and commissions are deducted when you sell your fund. The amount deducted will depend on the type of fund you owned and how many shares you sell.
I hold a BS in Computer Science and have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.