Saving and Investing for Students

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SAVING AND INVESTING
WATCH “TURNOVER” TO AVOID PAYING EXCESS TAXES
To maximize your fund returns, or any investment returns, 
know the effect that taxes can have on what actually ends up 
in your pocket. Funds that trade quickly in and out of stocks 
will have what is known as “high turnover.” While selling a 
stock that has moved up in price does lock in a profit for the 
fund, this is a profit for which taxes have to be paid. Turnover 
in a fund creates taxable capital gains, which are paid by the 
fund shareholders. All funds are now mandated by the SEC to 
show both their before- and after-tax returns. The differences 
between what a fund is reportedly earning, and what a fund is 
earning after taxes are paid on the dividends and capital gains, 
can be quite striking. If you plan to hold funds in a taxable 
account, be sure to check out these historical returns in the 
fund prospectus to see what kind of taxes you might be likely 
to incur.

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U.S. SECURITIES AND EXCHANGE COMMISSION
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How Can I Protect Myself? 
ASK QUESTIONS!
Many people hire an investment professional to assist in se-
lecting investments. You can never ask a dumb question about 
your investments and the people who help you choose them, 
especially when it comes to how much you will be paying for 
any investment, both in upfront costs and ongoing manage-
ment fees.
Here are some questions you should ask when choosing an 
investment professional or someone to help you:
• 
What training and experience do you have? How long 
have you been in business?
• 
What is your investment philosophy? Do you take a lot of risks 
or are you more concerned about the safety of my money?