Reading Time: 1-2 Minutes
Buying Mutual Funds – Net Asset Value
Buying and selling mutual funds is easy. To buy mutual funds you’ll want to open and fund an investment account. This investment account could be at a financial institution (Wells Fargo), brokerage firm (Scottrade), or from your financial advisor (Merrill Lynch).
After you have the account open you’ll be ready to buy and sell funds. You’ll place orders from your new account!
Buying and selling mutual funds is different from buying stocks. Stocks are traded through the entire trading day. A standard trading day is 9:30 a.m. to 4:00 p.m. Monday through Friday. You can buy and sell stocks all day long.
Mutual fund buy & sell orders can be placed throughout any trading day but the orders are not executed until trading ends at 4 PM.
You may be asking why mutual funds cannot be bought and sold like stocks? Great question!
Mutual funds tally up the value of its underlying securities at the end of each day and calculate a net asset value.
Net asset value is calculated by dividing the total value of all the securities in the fund’s portfolio minus any liabilities, by the number of the outstanding fund shares. The net asset value is also called the NAV.
Does this make sense? Remember the fund is made up of different stocks. These have to be calculated at the end of the day to determine the fund’s share price.
As you can see buying and selling mutual funds is easy…researching and valuing? Well, that is another story! More on that later…
Invest in Mutual Funds Module
Related posts:
Recent Comments