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Claudia Eggers February 22, 2020 Mutual Fund

But you have to remember those special mutual fund factors: minimum holding requirements once you buy a fund; short-term penalty fees if you sell too soon, and a possible frozen account if you re-buy a recently sold fund or funds too soon within 12 months. In other words either you or your software must track or base your selling and buying decisions upon how long you have owned a fund with a re-buy restriction on recently sold funds so you do not get caught in the round-trip trap.

The four-letter word that no business can live with out and is referred to as the lifeblood of any business is CASH. Accordingly, the individual investor is better served when they think like a business and create cash flows to deploy with leverage into arbitrages. What did he just say? If these terms are foreign to you and you claim to be an investor you better go look them up because they are as old as salt in the financial world and are the best investment advice three self-made billionaires on Forbes 400 ever heard. If you do not know how to enlist cash flow, arbitrage and leverage into your investment plan then seek out a firm that does before it is too late.

Stay Out of the Money Market Fund or Stable Value Funds - such funds are great if you are building an emergency cash reserve or saving for your summer vacation, but if your investment time horizon is long, putting your money in such vehicles is a poor decision. When the price is below the average you use, be in the Money Market, or stable value option that does not lose money! Move your investments to the stable option as soon as the indexes and funds move below the average you use.

As you can see, there are many reasons why market timing of mutual funds can be a difficult task. It is better to use an asset allocation model and adjust your allocations as needed. While most stock investors that trade or time the market usually lose money, most fund investors tend to make money over time. So select quality funds that meet your objectives, adjust your allocations and let the markets work to your advantage.