When you own an individual stock, you can choose to sell it at any time during the trading day (that is, while the stock market is in operation), and you will get the price that’s current at the moment you sell. When the stock market, or a particular stock, is very volatile, your selling price can change significantly throughout the day.
For example, the stock of an individual company may start the trading day at a price of $40.00 per share, rise to $45.00 by the middle of the day, and then fall to $37.50 by the end of the day. A simple calculation shows how time can affect the amount of money you may make from selling 100 shares: from an early morning $4,000, to an afternoon $4,500, to a day’s end $3,750.
When you want to redeem (that is, sell) shares of a mutual fund, the time of the day when you submit your request (by phone, fax, Internet, or mail) doesn’t matter. Although the net asset value (NAV) of the fund may rise and fall throughout the day, you always end up receiving a check based on the closing price for the end of the trading day (4 p.m. Eastern time). If you want to be relatively certain of the NAV at which your shares will be redeemed, place your sale order at or near the end of the trading day. That way, you know that the price quoted over the phone will probably be the same, or almost the same, as that day’s closing price.
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