How to Buy and Sell Mutual Funds

Once you've made the decision to invest in mutual funds, it's important to understand how to do so. How, exactly do you find a fund, and how do you put your money into that fund? Eventually, when you decide to sell, it's also important to understand how to sell a share of the mutual fund and how to process the sale.

Buying Mutual Funds

The easiest way to avoid sales charges when purchasing mutual funds is to do so without a third party. This is called a no-load mutual fund, and it means that you've purchased the fund directly. There are some funds that you can buy in this manner, directly from the company that sells them. Other funds are sold through a third party, which could include brokers, banks, financial planners and insurance agents. When buying from a third party, you will probably encounter mutual funds with a load, or sales charge, attached.

Fund Supermarkets

Today, while many purchases of funds still involve fees, there are ways around these fees. More funds can be purchased today with no-transaction fee programs that offer a cross-section of funds from various companies. These are often referred to as a "fund supermarket." This process really simplifies the purchasing of mutual funds, as it allows you to consolidate your holdings and record all of your records under one main umbrella. It also takes away the sales charges associated with purchasing from many different companies. Some of the more popular examples of these types of fund supermarkets include Shwab's OneSource, Vanguard's FundAccess and Fidelity's FundsNetwork. You can ask your broker about this idea as well, as many brokers can create a similar package.

Selling Funds

Selling mutual funds is quite simple and straightforward. Any mutual fund company will buy back your share of the fund on a given business day. You declare which day you want to sell, and they'll buy back your shares at that time. Within the United States, mutual fund companies are required to send you your payment within seven days.

Ready to Buy

When you're ready to buy mutual funds, there are certainly many ways to go about doing so. You can speak with friends about their choices, consult with a financial planner or meet with a broker. You can also read up a great deal on various mutual funds and on the opinions of people in the business. The Mutual Fund Education Alliance is the trade association that is not for profit of the no-load mutual fund industry. They have an interesting tool that allows you to search for no-load funds. Another option is to look at Morningstar, an investment research firm that is very helpful with its fund information.