What's the best way to get out of mutual funds to invest in the stock market for better return w/o losing lot$

I want to cash out the mutual funds I'm in now to buy stocks that I like when they go on sale but am scared to get killed for selling the mutual funds come tax season. I have auto draw set up right now and am thinking of having the auto go directly to online brokerage instead of going to mutual funds. But I don't know if I should just keep the mutual funds and start from now on or just sell the mutual funds and put that in a good stock pick.

And just what makes you think that you will get better returns investing directly in stocks? In theory you might but in practice you also might not. I wish that 30 years ago, I had sunk about $10,000 into a good mutual fund and just left it. There is no doubt that I would be ahead of the game now. You do own good mutual funds, don't you? If you don't you won't have to worry too much about capital gains when you pull the money out.

My advice. Stick with the funds and just invest your new money into the individual stocks. Then keep a record of your returns one against the other for the next 5 years.

I would sure like to know what the results are, but alas 5 years from now there may not be any way for you to tell me.

Right off I would say, do not make any sudden moves with this money. You do not say who you have your money invested through.
If it is a major player like Fidelity, I would simply move your money around into a fund that played the stock market more.
But the whole idea of mutual funds is for your investments to make you money in a fairly safe way.
If you are going to get hit by high taxes by taking your money out. I would not do that.
Right off have you ever heard of Dave Ramsey?
He has some great books out, get them, read them.
Now you like stocks, have you ever thought of buying some on your own. To get a feel for it.
See if you like it. You might make some money on your own. Just don't invest more then you can lose.

In order to offer an answer that would be helpful or practical, one would need a more comprehensive set of details than are included with your question. Variables such as the length of time you have held the funds in question, your position in each with respect to capital gains or losses, as well as other income, gains or losses that may offset those in the funds, would all be considered relevant factors in your decision. In addition, the fee schedule of the particular fund family would obviously play into it as well, and these vary, as do the fees applicable to each of the so-called fund "classes" ("A"-shares, "B"-shares, etc.) of the individual funds.

As a general rule, though, if your shares have appreciated in value since purchase, and you can leave a year and a day between purchase and sale, you will find that the effective tax rate applicable to shares held for any period longer than one year should, in most cases, be far more attractive than the rate applied to so-called short-term realized gains, that is, gains realized in less than one year. This is true of the shares of individual companies you are thinking of investing in as well, of course, so wherever possible, try to be patient with your investment decisions in that regard.

If your shares are selling today for less than your cost basis and you choose to realize the loss, you may be able to offset other income with some of these losses with the proviso that realized losses in excess of realized gains are subject to a limit as to being "carried forward" into the following tax year, and the current limit is $3,000. If this is relevant to your situation, then calculate as closely as you can the net of your positions to take best advantage of this, and time your sales accordingly.

Good luck, and I hope this helps, if only a little.

"But I don't know if I should just keep the mutual funds and start from now on ..."

That's certainly what I'd recommend. Since it sounds like you're a beginner at buying individual stocks, if I'm reading you right, then you would be better off starting off slowly and letting your mutual funds ride for a while.

For one thing, the stock market looked easy the last couple of years, but the next little while it might be harder to make money. And of course it always looks easier before you put Real Money into it.

So start slow and get some experience with smaller amounts of money first. You can always switch the mutual fund money into individuals stocks later, once you're proven to yourself that you know what you're doing and have a talent for it.

Hi,

The best way is to use your mutual funds to fund any stock trading you want to do....no selling needed...no new money needed.

You can use the stake as collateral against any trading. I suggest a resource below to use once you set up your account. This is a trader's member site that is very good at providing support, tools and education for new traders and pros.

Just find a broker who will loan you funds on margin against your current mutual fund. Then I suggest you learn not just about buying stocks but about using ioptions.

These allow you to make money when the market falls.

Resources below:

The best way is to diversify and invest in a handful of stocks (about 5) each in a different sector. Make each of those best in breed in their respective sectors.

If you have time to actually follow the market and want more bang for your buck try "trading" the market vs. "investing." The difference is you get in and out of individual stocks as the market swings and don't hold your position for lengthy periods of time. I highly recommend options trading. To learn more feel free to check out the Bulls & Bears yahoo group. I post my daily stock picks there. The web site is:

http://finance.groups.yahoo.com/group/bu...

mutual funds have lower volitality than regular stocks (and etf's) meaning they are not subject to wild price swings (anything over .50 a share) that often. You didn't what mutual funds you have one person nailed it if its is a class a or b share you would be better off getting rid of it. However if its working for you keep it in there.