Funds offer plenty of benefits to busy investors. Here's what you need to know after you add them to your portfolio.
After you buy mutual funds, your mailbox will be flooded with even more paperwork. For each fund you own, you'll receive semiannual and annual reports, newsletters from fund companies, updates from fund managers and tax forms. Actually, you can toss most of what you receive.
Here's a list of investment-related paperwork you need to hang on to permanently:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
All your income-tax returns. But you only need to keep supporting tax documents — including 1099s and other investment and tax information — for three years after you file. After three years, you can be audited only if you've underreported your income by 20% of more or have committed fraud.
Records of all retirement-plan contributions, distributions, conversions and rollovers.
Records of the purchase of securities you haven't sold yet, regardless of whether you bought them or received them as gifts. Keep these records for three years after you sell the securities.
Track your investments
Consider setting up an online portfolio tracker, or look for personal finance software that includes one of these handy tools.
At the very least you'll want to record the date you purchased the shares, the number of shares you bought and what you paid per share. This information will be critical when you decide to sell (see Hang onto your profits).
Even though you have access to online quotes, avoid obsessing over daily price swings.
Reassess your plan annually to make sure your returns are keeping pace with expectations. Also make sure that hot gains in one fund or lagging returns in another have not thrown your portfolio out of whack.
Know when to sell
But if your fund trails other similar funds for two or three years, it's probably time to consider moving on.
Other possible reasons to sell include:
A new manager. Look at the newcomer's background. Maybe he or she has managed a fund before and is worth a chance. But remember, when a fund changes managers, its track record goes out the window.
QUIZ: Test Your Investing IQ
Too many assets. Funds that invest in small companies have a way of losing steam as they grow larger -- certainly when they bloat to $2 billion or $3 billion in assets. As money pours in, be prepared to look for a similar fund with a smaller asset base.
-
Stock Market Today: Have We Seen the Bottom for Stocks?Solid first-quarter earnings suggest fundamentals remain solid, and recent price action is encouraging too.
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
The Economic Impact of the US-China Trade WarThe Letter The US-China trade war will impact US consumers and business. The decoupling process could be messy.
-
What DOGE is Doing NowThe Kiplinger Letter As Musk's DOGE pursues its ambitious agenda, uncertainty and legal challenges are mounting — causing frustration for Trump.
-
A Move Away From Free TradeThe Letter President Trump says long-term gain will be worth short-term pain, but the pain could be significant this year.
-
Trump’s Whirlwind Month of Crypto MovesThe Kiplinger Letter The Trump administration wants to strengthen U.S. leadership in the cryptocurrency industry by providing regulatory clarity.
-
What Could Derail the Economy This Year?The Letter While the outlook for the U.S. economy is mostly favorable, there are plenty of risks that bear watching.
-
Three Ways President Trump Could Impact the EconomyThe Letter Some of Trump's top priorities could boost economic growth, but others risk fueling inflation.
-
Europe Faces Economic and Political Headwinds Next YearThe Letter Challenges for Europe: Potential tariffs, high energy prices and more competition from China will weigh on the bloc in 2025.
-
Don't Sleep on Japan's Economic TransformationThe Letter After almost three lost decades, Japan — one of the world's biggest economies — is finally showing signs of life.
