Forget About Investing Into Mutual Funds (for now, that is)

If you're considering to start investing into mutual funds, it may be a good idea to delay that decision for a few months. Many mutual funds make capital gains distributions at the end of the year and what that means for new investors is that they will pay taxes on gains they didn't receive if they invest into a fund shortly before the distributions are made. Since distributions are often made during the months of November, December, and January, it may make sense to wait a while.

Of course, the size and frequency of distributions vary from fund to fund, so you'd need to research the particular mutual fund you're interested in. What I would do in this situation is:

1. Find the mutual funds you're interested in


2. Research the capital gain distributions policy: how frequently distributions are made, what's the expected amount of distributions this year, and when they expect to make these distributions


3. If this information isn't readily available on their web site or you simply don't seem to be able to find it, then just e-mail the fund adviser and inquire about it (e-mail addresses, or contact forms, should be easily found on their web sites)


4. Once you know the date of the distribution, mark it on your calendar and invest into the fund you chose after that date

Additional information:

• Morningstar: Watch Out for Distributions