I have been reading all I can about , but I can’t find out how to determine profit or loss on a short term (say, 6 or 7 months). I understand the following about how funds earn if held over a year:
·The fund earns income on its , and distributes it to you in the form of dividends.
·The fund produces capital gains by selling securities at a profit, and distributes those gains to you.
·You sell your shares of the fund at a higher price than you paid for them.

So then, if a fund is held short term, do I still get a proportion of the dividend and distribution? Or is a short term gain (or loss) only determined by share price?

Thanks for helping or other referrals.
Happy Holidays to all!!!
tc

 

  • muncie birder 3:58 pm on February 11, 2010

    It depends on when you buy and sell the mutual fund. Nearly all, if not all mutual funds go ex-dividend about the middle to the end of December. They have nearly gone gone ex-dividend in the past 2 weeks. If you had purchased the mutual fund prior to the ex-dividend date and held the mutual fund through the ex-dividend date, you would have received the dividend. If on the other hand you had purchased and sold the mutual fund before the ex-dividend date, you would not have received the dividend.

    Now you need to also know this. When the mutual fund goes ex dividend, the price of the mutual fund drops by the amount of the dividend. So with one exception it does not matter one way or the other short term whether get the dividend or not. The exception is that the dividend is treated for tax purposes as long term capitial gains in most cases or as dividend income which is treated at a very favorable tax rate. Short term capital gains is taxed at the normal tax rate. You also need to know that many mutual funds, if not all charge a redemption fee for shares not held a certain period of time. For some it is 90 days. I do not believe that funds with front end loads have a redemption fee in general because they stuck it to you when you purchased the fund. To avoid redemption fees and front end loads, trade only index funds or closed end funds that are ETFs.

  • RajeshKaushal 3:58 pm on February 11, 2010

    My friend,

    I do not have much expeirience in stocks and mutual funds, but to my expeinece, I prefer long-term invetment in this sector. Long term investment assures u that u can get a good return. However, in short term u still get a porportion depending the unit price. Pls talk face-to-face to some expeineced people in this regards. However, mutual fund is considered safe for the beginers interested in investing in stockmarket.

    Enjoy

    • People are reading:

    mutual fund commission dividend profit loss calculation, load funds short term long term, loss calculation mutual fund