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Funds 504: When to Sell a Fund

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1.
If you began investing for retirement and now your goal is to buy a home in two years, _______.
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You may need to sell some of your aggressive funds. If your goals change, your portfolio should, too. Since you're now planning for a shorter-term goal, you may need to sell some of your aggressive funds and become more conservative.
2.
If your fund is an underperformer, you should consider all but which of the following before selling it?
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Check its one-year performance. You may want to give the fund more than one year before selling due to underperformance.
3.
Before cutting an underperforming fund, check its _______.
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Three-year return against an appropriate index and its peers. Give funds a few years before cutting them loose, and be sure to compare them with appropriate benchmarks.
4.
Is it okay to sell a fund that you've lost money on?
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Maybe. While buying on dips or holding on to break even are strategies that many investors employ, you don't have to, as long as you know that you'd never make such a volatile investment again. Learn from your mistakes.
5.
In a mutual fund, style shift _______.
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Sometimes indicates a change in strategy. Funds can change styles without a strategy change. A manager may buy small-cap stocks, for example, but hold onto them as they grow into large-cap names. Thus, a small-cap fund may shift into a mid-cap fund without a full-blown strategy change.