Selling Mutual Funds

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Feb 27th, 2020 4:42 pm

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Feb 27th, 2020 10:20 am

Brandon26 [OP]: Penalty Box; Jul 21, 2019; 346 posts; 655 upvotes

Feb 27th, 2020 10:20 am

Selling Mutual Funds

Has anyone gone through the process of selling mutual funds? I heard you don't know what you are selling them for until the end of the day, I'm on the verge of losing money and just want to sell them all, I want the money to invest in other things as right now is a good time with how the markets are going down. I was dumb and bought them when I didn't know much, but now I know a lot and have other things I want to do, but I don't want to lose money. Is it worth selling them now?

4 replies

Feb 27th, 2020 10:51 am

Deepwater: Deal Addict; Feb 1, 2012; 1994 posts; 3320 upvotes; Thunder Bay, ON

Feb 27th, 2020 10:51 am

If you enter an order today before your bank or broker's daily selling deadline (usually 3:00 PM Eastern time) the order will be filled the next trading day at today's closing price. So yes, you don't know what your selling price will be. Mutual fund prices are updated only once daily based on the closing prices of al the fund's holdings.

If you want to sell to purchase another investment you will be selling low then buying low so it will be close to a wash, except for the time you are out of the market waiting for your sell and buy orders to fill.

But if you are selling because of uncertainty and market losses, that usually results in buy high / sell low behaviour. Consider writing yourself an Investment Policy Statement to help guide your decisions.

I solemnly swear, to never assume I have an inkling at which direction the market will head, and to never make any investments based on a timing strategy.

Feb 27th, 2020 11:03 am

Brandon26 [OP]: Penalty Box; Jul 21, 2019; 346 posts; 655 upvotes

Feb 27th, 2020 11:03 am

Deepwater wrote: ↑ If you enter an order today before your bank or broker's daily selling deadline (usually 3:00 PM Eastern time) the order will be filled the next trading day at today's closing price. So yes, you don't know what your selling price will be. Mutual fund prices are updated only once daily based on the closing prices of al the fund's holdings.

If you want to sell to purchase another investment you will be selling low then buying low so it will be close to a wash, except for the time you are out of the market waiting for your sell and buy orders to fill.

But if you are selling because of uncertainty and market losses, that usually results in buy high / sell low behaviour. Consider writing yourself an Investment Policy Statement to help guide your decisions.

Thanks, it's meant to be long term, but I don't even want mutual funds anymore, I just did it a few months ago before I really got into investing. Basically I just want to buy VGRO or possibly another ETF by myself, instead of getting ripped off by the bank. I figure it's better to buy when it's lower right now, I plan on holding for 30-40 years.

I just don't want to lose money on the mutual fund since I don't want it long term anymore, but it seems like I am screwed today since it was only up $64 today, and I'm sure the markets will close even lower today.

Feb 27th, 2020 4:26 pm

gparadis01: Jr. Member; Jun 17, 2018; 122 posts; 97 upvotes; Hamilton, Bermuda

Feb 27th, 2020 4:26 pm

You should make sure you won't get dinged by deferred sales charge (DSC). You can lose 6% in some cases if you sell the mutual funds within the first year you bought them.

Feb 27th, 2020 4:42 pm

yvrbanker: Sr. Member; May 2, 2019; 771 posts; 1023 upvotes; Vancouver

Feb 27th, 2020 4:42 pm

Brandon26 wrote: ↑Basically I just want to buy VGRO or possibly another ETF by myself, instead of getting ripped off by the bank. I figure it's better to buy when it's lower right now, I plan on holding for 30-40 years.

It's best for you to do this change when the markets are quiet. It does not matter if the prices are high or low, as they affect both mutual funds and ETFs. If markets drop, you get less from your mutual funds but buy ETFs similarly for less. If prices are high, you get more from mutual funds but have to pay more for ETFs. The difference should be only in commissions, which are depending on funds' MER (management expense ratio) which could be 2% a year or much less. Waiting a month or two for quiet times does not cost you much.

However if you do it on a day like today, you are risking to lose much more as you might be selling at the worst price (the close of today) but cannot buy ETFs until two business days later, that's when the transaction is settled for cash. If the market rebounds in the next day or two, you may lose several % of your investment due to having to pay more for ETFs.

I got a call from a friend last night asking if he should sell his mutual funds, so it appears to be a common thinking, and maybe it is a contributor to the market selloff. It is a wrong thinking, and some people will become victims of it.

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