DO-IT-YOURSELF BUYING AND SELLING
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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
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a set amount of money withdrawn from your bank account each month and sent to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.
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.