How to Manage Your Fund Investments Tax-Efficiently

You're not allowed to switch back and forth within a fund, though. You can calculate your cost basis differently in each of your funds, but once you've used a method for a fund, you need IRS permission to change it for that fund.

Most fund companies will calculate your overall basis in a fund for you, although most charge upwards of $75 for the service.

Fidelity Investments, though, rolled out a new program last year. Fidelity has put its record-keeping system on the Web, allowing its customers to sift through as many as 150 of their own purchases to see what they paid for each lot of mutual fund shares and, consequently, which would be the most advantageous to sell.

Until such a tool is available to all investors, though, those who want to make the most of their investing and tax decisions will just have to sit with stacks of statements and a calculator. And a whole lot of coffee.

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