Mutual fund companies try to discourage short-term trading in mutual funds. To discourage investors from this practice, fund companies apply a short-term trading penalty. These are fees paid by the investor is you sell the fund within a certain number of days after buying the fund. These fees are often in affect from 14 to 90 days from the time of purchase. Check in the mutual fund’s prospectus to see of the fund you are considering buying has a short-term trading penalty.
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