Funds Intermediate: When to Sell a Fund

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
If your fund is an underperformer, you should consider all but which of the following before selling it?
Choose wisely. There is only one correct answer.
Check its one-year performance. You may want to give the fund more than one year before selling due to underperformance.
2.
If your mutual fund is so volatile that it is giving you excessive stress, you can consider selling it.
Choose wisely. There is only one correct answer.
True. Here, you might want to buy a fund that doesn't cause migraines or ulcers.
3.
As your financial goals change throughout life, what should happen with your mutual funds?
Choose wisely. There is only one correct answer.
They should probably change too. At the very least, it's a good idea to make sure that they can meet your financial goals.
4.
In a mutual fund, style shift _______.
Choose wisely. There is only one correct answer.
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.
5.
Is it okay to sell a fund that you've lost money on?
Choose wisely. There is only one correct answer.
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.