Most investors think that whenever you buy or sell a security the money is immediately deducted or deposited into your account. This is not true.
Although the results of the trade may look as though they have taken place, the money is not actually due until the settlement date.
Mutual fund trades settle in one day and must be made before 4pm. The mutual fund companies then use the pricing of assets as of 4pm to set the share price for the assets they own and then determine how many shares each new investor is purchasing for the deposit they …Read More