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Mutual Fund Questions

What is a mutual fund?

A mutual fund is a type of fund that is professionally managed collective investment vehicles that will pool money from a lot of investors to purchase so that they can purchase securities. In most cases, a mutual fund must be registered for the Securities and Exchange Commission that is generally overseen by a board of directors or a board of trustees and is managed by a registered investment advisor. Most generally, if the mutual funds meet certain requirements, then they are not taxed on their funds. Questions below pertaining to mutual funds have been answered by the Experts.

What would be a sound single mutual fund to use for retirement income?

There are generally a lot of factors that a person would need to consider. The risk tolerance and returns that a person would generally desire to achieve in order to meet their investment goals and would need to be a balanced fund that would include both bonds and stocks might be what the person would need to consider.

If a person would to have inherited two mutual funds in the year 2008 and seem to be fluctuating up and down by an amount of $300, would the person be better off to sell both mutual funds to be in a smaller tax bracket?

If the person wanted to be in a lower tax bracket, then they would want to consider selling both mutual funds. If the person is in the 15% tax bracket, then the capital gains tax would be 0% and if the person is in the 25% or higher tax bracket. Then they would have to pay a capital gains tax of 25%

If a person were to open a mutual fund, would the mutual fund be honored at the time the funds were purchased or would they be valued at the time of the funds clearing the bank?

In most cases the funds would generally have cleared the day the mutual funds were bought even if they showed a different day the funds cleared. The fund company that set up the funds would have the money to cover the funds until the check or other forms of payment cleared the bank. If the person buys the mutual fund on a certain day, then the fund company can purchase the funds the same day or on a day the person asks for the funds to be purchased.

If a person were to liquidate a poor mutual fund that they had for many years, would the person need to report the number of shares sold or the cost of the shares or the reinvested shares for tax purposes?

The person would need to determine the cost basis of the shares that they sold, which can prove to be complicated, but in most cases the mutual funds will track the cost basis and give the person a 1099 form for taxes. The person’s cost basis is generally not given to them making it to where they have to figure these themselves.

Mutual funds help the person to invest money. When a person is thinking of setting up a mutual fund, or they have inherited a mutual fund, then they may have questions regarding the laws and regulations of mutual funds. When these questions arise, then the person would need to seek the insight of an Expert.
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