BOSTON (CBS) – Kenny Rogers sings “You’ve got to know when to hold ’em, and know when to fold ’em.”

So when do you sell your mutual fund?  The number one reason to sell is when your goals or objectives are met and you need the dollars to pay for the goal.

As you are getting closer to reaching your goals you should be thinking about changing the asset allocation of the investment. That will mean selling the riskier investments and putting the money in more conservative investments.

For example; your son is a sophomore in high school, college is only 2½ years away. It’s a good idea to begin to sell some of the stock mutual funds over the next couple of years so you have at least the first and the second year’s tuition in cash.

Still another reason to sell your mutual fund is if it is under performing the benchmarks and its peers. Compare those one-year, 3-year and 5-year performance numbers. If it doesn’t make it, you might want to cut it from the portfolio. But one poor year for a very good fund is not enough to sell in my mind.

But be careful here. If it is not in your retirement account selling will trigger a taxable event.

Consider selling if there are legal problems with the mutual fund company or your particular mutual fund or the fund managers. If the fund manager leaves, or the fund has grown so large, it basically has become an index fund might be a reason to sell.

Morningstar reports will also help here by listing the manager’s education and experience and tenure.

Also utilize newsletters for research on funds. They make buy and sell recommendations and back it up with research.

Newsletters I use: Jim Lowell’s Fidelity Investor. Another good newsletter for Fidelity funds is the Fidelity Monitor and Insight. The Money Letter, and the  Mutual Fund Observer also sit on my desk. There are also newsletters dedicated to Vanguard funds as well.


You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.

Subscribe to Dee’s Money Matters newsletter here.


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