Across My Desk: End of Year Advice

This time of year, the standard advice is not to purchase shares of a mutual fund until after the fund's capital gains distributions have been made. Doing so means you'll have a tax bill to pay in the spring. Then again, not all funds will make cap gains distributions.

What to do? Morningstar analyst Christopher Davis suggests that investors with money to spend find out if a fund intends to make a distribution this year before buying it. "Otherwise you'll be paying for the gains you weren't there to enjoy," Davis says.

Interested investors will also find a wealth of information---including capital gains data on their funds---on their web sites. Investors are also encouraged to call the fund family they've an interest in and find out what he particulars are on the fund they'd like to invest in regarding its capital gains distributions.

Keep in mind, the better the performance a fund has had this year, the greater the likelihood that there will be a tax consequence.

Don't forget, the short-term capital gains are taxed at 35%; long-term cap gains are taxed at 15%.