Mutual Funds/Sell shares?

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Question
QUESTION: I bought shares in a mutual fund in 2012.I paid $63.83 per share.Now the share price is $54.57.Now, the year-to-date rate of return is 5.18.It seems like I made good money the first half of this year but I could use some of the principle money that is invested in this account.Would it be wise to sell some of the shares at a loss/Thanks!

ANSWER: Hi Randy--

The key questions are:

1. How good is this fund? How many stars does it get from Morningstar?
2. Is it a well diversified fund--assuming it is the key fund in your portfolio?
3. How badly do you need money?

Write and tell me the name of the fund and I'll check it out.

Warren


---------- FOLLOW-UP ----------

QUESTION: Name of fund-American funds Capital Income Builder.I don't know the number of stars.It isn't my key investment.I am retired & could just use a little extra spending money.

Answer
The fund gets 3 stars from Morningstar--average--
The American funds in LA are a classy outfit--although the company charges loads--
The fund is yielding over 4%, and Morningstar's analyst thinks it's headed in the right direction (boosting its allocation to stocks and away from low-yielding bonds)--

There are better funds out there--I prefer the Vanguard family, and like Vanguard Dividend Growth--and Wellesley Income--
but this is an OK fund for someone looking for yield--

So it's up to you--how badly do you need a lump sum of cash?

Good luck.

Warren  

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Warren Boroson

Expertise

Author of "Keys to Investing in Mutual Funds" (Barrons), "Ultimate Mutual Fund Guide" (Probus), "How to Pick Stocks Like Warren Buffett" (JKLasser), and "The Reverse Mortgage Advantage" (McGraw-Hill). Former financial columnist for Gannett News Service.

Experience

Author of 20 books; winner of 1996 Personal Finance award from Investment Company Institute and Washington University. Formerly on staffs of Money and Sylvia Porter's Magazine. Had a radio program (on WEVD) about mutual funds and a newsletter, FundDigest.

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