Q: I have heard that I should not buy a mutual fund near the end of the year, because I will have to pay income tax on the fund's capital-gains distribution. When do mutual funds make capital-gains distributions? Why would a person not want to receive the capital-gains distribution, even if it were subject to an income tax?
L.W., Stamford, Conn.
A: A capital-gains distribution is a net profit achieved by selling securities that climbed in price, after subtracting any losses. Most fund companies make capital-gains distributions in December. Call the company to check the date.
Essentially, if you buy in just before the distribution, you are getting back your own money as a gain, since you have not been in the fund as it grew during the year. But you still have to pay a tax on that "gain." Consumer experts agree that if you invest at year's end, wait until after the distribution date.
Good discussions about capital-gains distributions can be found in "Personal Finance For Dummies" by Eric Tyson and "The Right Way to Invest In Mutual Funds" by Walter Updegrave.
Q: An ad in the Monitor Dec. 4 offered a 15-month term investment at 12.01 percent. What kind of investment is this? Is something like this an insured investment?
M.J., Lacey, Wash.
A: As the ad pointed out, the obligation represents a promissory note (somewhat like a corporate bond), and is not insured by the Federal Deposit Insurance Corp. The issuer, American Business Financial Services Inc., is a publicly traded company located in Bala Cynwyd, Pa.
Q: I am trying to find out the name of a mutual fund that was held by an elderly parent a number of years ago. I believe my relative cashed out the account, but I am not certain. How can I track down the fund?
T.S., New York
A: Call the Security and Exchange Commission's Office of Investor Education and Assistance at 202-942-7040 to see if they have the fund in their database. If they don't, contact Wiesenberger/Thomson Financial at 301-545-4000. They carry lists of old and liquidated mutual funds.
Finally, you might try a Web search at financial-information firm Morningstar Inc., at www. morningstar.com.
Questions about finances? Write: Guy Halverson, The Christian Science Monitor, 500 Fifth Ave., Suite 1845, New York, NY 10110, E-mail: email@example.com
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