Mutual funds are not traded throughout the day. When is the best time to buy shares in a mutual fund then? If I initiate a transaction during the day, the prices of the shares in the fund are based on the end of day prices of the stocks in the fund. At least that’s my understanding of it.
Is it worth it to try and buy funds at a low price in my IRA? Or should I just buy $250 worth at the end of each month?
Can I wait until the end of the day to see how the market went, and decide to buy shares in my Mutual funds after the market is closed?
February 22nd, 2008 at 1:31 pm
I would place my order on the down day but before the Market closes since you will miss the buying price of the close. It makes sense to have a consistent contribution of $250 and to make a larger contibution when you think the market is undervalued.
March 5th, 2008 at 10:20 am
I would say that mutual funds generally are not that volital so I don’t think the price when you put your buy in to when you get it would make that big of a difference. Or you could look into ETFs that follow indexs just like index funds, but you can trade throughout the day. I do not know to much about them but I believe serg should be able to answer most questions about ETfs
March 5th, 2008 at 11:34 am
It depends what mutual fund you are in. If you are in an index fun then prices could be volatile especially in the last few months. So it does make a difference when you buy in. If the dow is down 200 points today and you get in at that low price it makes a big difference.
March 6th, 2008 at 10:06 am
Serg that is a good point. It does depend on the volitilty of the specific fund. There are alot of international funds, the ones i price, that where the prices are not that volitale at all
March 20th, 2008 at 11:02 am
Don’t buy into it on the month of dividens pay out which involves taxes…. most funds happen in december. ur better off contributin 275 per month and not make a contribution on the month of december or u’ll get taxed on 250 of which didnt make u enough $ yet… i usually try to balance my ANNUAL contribution and divide it by 11 so i know what to contribute each month. Also, i usually contribute to it on a specific day or close to it..since u rarelly can predict the market for the next day…although sometimes, u can get an idea… and i contribute in the morning..usually by the next day my $ is in “cash” availalble to buy into a fund… so to summarize:
1. contribute on a specific day so U know what $ u’ll have in the bank and deposited in ur IRA.
2. look at the way the market is behaving a few days prior to buying into the fund and make ur decision whether to buy or hold 1 or 2 days.
3. avoid buying to close to the dividend date.
March 24th, 2008 at 7:38 am
I usually contribute at the end of the month in the last week. I know what you mean you can’t pick a specific day to buy because you don’t know what the market is going to be like. I usually leave myself a week to figure out which day to buy. I put my “order” in before the end of the day on a day that looks like it will close on a down.
I don’t understand the dividend date thing. You will not be charged if you don’t contribute that month? They don’t take into consideration your other contributions?
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