Stop buying mutual funds!

Got you attention, did I? No, I think everyone should have mutual funds, especially the index variety. But if you're thinking about making a purchase right now, today, pronto in a taxable account then please wait until January 1, 2018. Why?

Most mutual funds are required to pay their year end distributions by, you guessed it, year end. That means that there's a rush to distribute in the closing days of the year. If you buy a mutual fund today in a taxable account and the fund makes its capital gains and dividend distributions in a month, you'll be taxed! No worries for a tax-deferred account such as an IRA or 401k.