Don't Buy Mutual Funds at the End of the Year

Unlike stocks, mutual funds must distribute all of their capital gains and dividends to their shareholders at least once a year. Usually, funds do this near the end of the year. If you buy into a fund right before the distribution date, you have to pay taxes on those distributions without enjoying any of the benefits of that year's gains. If, on the other hand, you own a fund and you've been thinking about selling it, it might be a good idea to sell the fund before those distributions.