Fund Mechanics: Investing & Redeeming

Step 1: What's the Best Way to Buy Fund Shares?

Fund Mechanics: Investing & Redeeming Splash image

A variety of useful shareholder options exist for investing and withdrawing money, both on an individual transaction and a systematic basis. By using services like those examined here, you may be able to manage your investments in a simpler, more efficient manner. This may even lead to improved results. Since our coverage is quite comprehensive, you may not find all the services discussed offered by the mutual funds you deal with. In addition, individual procedures can vary somewhat among funds.

Making Your First Investment

Classroom Steps

The traditional way of investing in a fund is simply to place a check in the mail. But it could take up to a week—or longer—for your money to arrive and be put to work. By letting a few days elapse you risk paying more per share for a volatile fund than you had expected. Of course, if you're lucky you might pay less.

It frequently makes sense to have a better idea about the price you will pay, especially if you're going to invest a fairly large sum in a more volatile fund. By taking action prior to 4 p.m. Eastern time, it's possible to buy at the price prevailing on the day you place your order. Of course, the price you'll pay is not the only consideration—putting the money to work sooner is beneficial to fixed-income investors who are placing a large amount—say $50,000 or more—into an account and don't want to wait to begin accruing dividends.

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