Bob Brinker's Marketimer

  Wednesday December 12, 2018

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Most mutual fund shares can be purchased directly from the mutual fund company. Buying mutual fund shares is easy to do. You simply contact the fund, which will send you an application form to fill out and return with your money. Each time you buy more shares, you will receive another investment form.

Although you can buy shares yourself, many investors prefer to have a broker or advisor do it for them. Brokers and other financial advisors offer investment advice about funds, in return for which they may receive commissions or fees.

You can also set up an automatic investment plan when you complete your fund application. With an automatic investment plan, you can have a set amount of money withdrawn from your bank account each month and sent to the fund. Funds that require a minimum initial investment may waive this amount if you agree to an automatic investment plan.

Shares may also be sold back to the fund. You can redeem shares by contacting the fund company and requesting to redeem shares. Many funds allow you to redeem shares over the telephone, but some require written requests.

The fund's prospectus, a document that describes the fund's investments and performance, also explains your options for redeeming shares.

Current mutual fund public offering price (POP) and net asset value (NAV) are quoted daily in the financial pages. To calculate net asset value, fund managers add the total value of the fund's assets, subtract all liabilities, and then divide by the total number of shares that the public owns (called outstanding shares). The POP is the NAV plus the sales charge, if any.

The final advantage we will look at is an easy way to leave one fund and enter another.


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