Does an owner of a bond etf get an income even if he sells before the day of distribution?
Your ETF will return the interest as dividends.  If you hold the ETF on the day before the Ex-Dividend date, you will get the dividend.  If you sell before that, you will not.  Note that at least one other answer to this question is wrong.  You do NOT need to hold on the Record date.  There is usually 2 days (or so) between the ex-date and the record date, which corresponds to the number of days it takes for your trade to settle.  See the rules as published by the SEC: http://www.sec.gov/answers/dividen.htm Bond ETFs are traded like normal stock.  It just so happens to be that the underlying fund (for which you own shares) is invested in bonds.  Such funds will typically own many bonds and have them laddered so that they are constantly maturing.  Such funds may also trade bonds on the OTC market. Note that with bond ETFs you're able to lose money as well as gain depending on the situation with the bond market.  The issuer of the bond does not need to default in order for this to happen.  The value of a bond (and thus the value of the bond fund which holds the bonds) is, much like a stock, determined based on factors like supply/demand, interest rates, credit ratings, news, etc. There are two 'dates' relevant to your question: Ex-Dividend and Record. To find out these dates for a specific security visit Dividend.Com. You have to purchase the security prior to the Ex-Dividend date, hold it at least until the Record Date. After the Record Date you can sell the security and still receive the dividend for that quarter.  ---- edit - - - -  I was wrong. If you sell the security after the Ex-div date but before the date of record you still get the dividend.  http://www.investopedia.com/articles/02/110802.asp
The real value of a share of stock is the current cash value of all dividends the owner will receive, plus the current cash value of the final liquidation if any.  Since people with different needs may judge the current cash value of an income stream differently, there would be a market basis for people to buy and sell stocks even if everyone could predict all future payouts perfectly. If shareholders knew that a company wouldn't pay any dividends until it was liquidated in the year 2066, whereupon it would pay $2000/share, then each share would in 2016 effectively be a fifty-year zero-coupon bond with a $2000 maturity value.  While some investors would be willing to trade in such an instrument, the amount of money a company could charge for such an instrument would be far lower than the money it could charge for one with payouts that were more evenly distributed through time. Since the founders of most companies want their companies to be around for a long time, that would mean that shareholders would have no expectation of their shares ever yielding anything of value within any foreseeable timeframe.  Even those who would be more interested in share-price appreciation than dividends wouldn't be able to see share prices rise if there wasn't any likelihood of the stock being bought by someone who wanted the dividends. "Mutual funds generally make distributions once a year in December with the exact date (and the estimated amount) usually being made public in late October or November. Generally, the estimated amounts can get updated as time goes on, but the date does not change. Some funds (money market, bond funds, GNMA funds etc) distribute dividends on the last business day of each month, and the amounts are rarely made available beforehand. Capital gains are usually distributed once a year as per the general statement above. Some funds (e.g. S&P 500 index funds) distribute dividends towards the end of each quarter or on the last business day of the quarter, and capital gains once a year as per the general statement above. Some funds make semi-annual distributions but not necessarily at six-month intervals. Vanguard's Health Care Fund has distributed dividends and capital gains in March and December for as long as I have held it. VDIGX claims to make semi-annual distributions but made distributions three times in 2014 (March, June, December) and has made/will make two distributions this year already (March is done, June is pending -- the fund has gone ex-dividend with  re-investment today and payment on 22nd). You can, as Chris Rea suggests, call the fund company directly, but in my experience, they are reluctant to divulge the date of the distribution (""The fund manager has not made the date public as yet"") let alone an estimated amount. Even getting a ""Yes, the fund intends to make a distribution later this month"" was difficult to get from my ""Personal Representative"" in early March, and he had to put me on hold to talk to someone at the fund before he was willing to say so." When you invest (say $1000) in (say 100 shares) of a mutual fund at $10 per share, and the price of the shares changes,  you do not have a capital gain or loss, and you do not have to declare anything to the IRS or make any entry on any line on Form 1040 or tell anyone else about it either. You can brag about it at parties if the share price has gone up, or weep bitter tears into your cocktail if the price has gone down, but the IRS not only does not care, but it will not let you deduct the paper loss or pay taxes on the paper gain.  What you put down on Form 1040 Schedules B   and D is precisely what the mutual fund will tell you on   Form 1099-DIV (and Form 1099-B), no more, no less. If you did not report any of these amounts on your previous   tax returns, you need to file amended tax returns, both   Federal as well as State, A stock mutual fund invests in stocks and the fund manager may buy and sell some stocks during the course of the year. If he makes a profit, that money will be distributed to the share holders of the mutual fund. That money can be re-invested in more shares of the same mutual fund or taken as cash  (and possibly invested in some other fund). This  capital gain distribution is reported to you on Form 1099-DIV and you have to report sit on your tax return even if you re-invested in more share of the same mutual fund, and the amount of the distribution is taxable income to you. Similarly, if the stocks owned by the mutual fund pay dividends, those will be passed on to you as a dividend distribution and all the above still applies. You can choose to reinvest, etc, the amount will be reported to you on Form 1099-DIV, and you need to report it to the IRS and include it in your taxable income. If the mutual fund manager loses money in the buying and selling he will not tell you that he lost money but it will be visible as a reduction in the price of the shares. The loss will not be reported to you on Form 1099-DIV and you cannot do anything about it.  Especially important, you cannot declare to the IRS that you have a loss and you cannot deduct the loss on your income tax returns that year. When you finally sell your shares in the mutual fund, you will have a gain or loss that you can pay taxes on or deduct. Say the mutual fund paid a dividend of $33 one year and you re-invested the money into the mutual fund, buying 3 shares at the then cost of $11 per share. You declare the $33 on your tax return that year and pay taxes on it. Two years later, you sell all 103 shares that you own for $10.50 per share.  Your total investment was $1000 + $33 = $1033. You get $1081.50 from the fund, and you will owe taxes on $1081.50 - $1033 = $48.50. You have a profit of $50 on the 100 shares originally bought and a loss of $1.50 on the 3 shares bought for $11: the net result is a gain of $48.50. You do not pay taxes on $81.50 as the profit from your original $1000 investment; you pay taxes only on $48.50 (remember that you already paid taxes on the $33). The mutual fund will report on Form 1099-B that you sold 103 shares for $1081.50 and that you bought the 103 shares for  an average price of $1033/103 = $10.029 per share. The difference is taxable income to you. If you sell the 103 shares for $9 per share (say),   then you get $927 out of an investment of $1033 for   a capital loss of $106. This will be reported to you   on Form 1099-B and you will enter the amounts on   Schedule D of Form 1040 as a capital loss. What you actually pay taxes on is the net capital gain, if any, after combining all your capital gains and losses for the year. If the net is a loss, you can deduct up to $3000 in a year, and carry the rest  forward to later years to offset capital gains in later years. But, your unrealized capital gains or losses (those that occur because the mutual fund share price goes up and down like a yoyo while you grin or grit your teeth and hang on to your shares) are not reported or deducted or taxed anywhere. It is more complicated when you don't sell all the shares you own in the mutual fund or if you sell shares within one year of buying them, but let's stick to simple cases. "Many individual states, counties, and cities have their own income taxes, payroll taxes, sales taxes, property taxes, etc., you will need to consult your state and local government websites for information about additional taxes that apply based on your locale. Wages, Salaries, Tips, Cash bonuses and other taxable employee pay, Strike benefits, Long-term disability, Earnings from self employment Earned income is subject to payroll taxes such as: Earned income is also subject to income taxes which are progressively higher depending on the amount earned minus tax credits, exemptions, and/or deductions depending on how you file. There are 7 tax rates that get progressively larger as your income rises but only applies to the income in each bracket. 10% for the first 18,650 (2017) through 39.6% for any income above 470,700. The full list of rates is in the above linked article about payroll taxes. Earned income is required for contributions to an IRA. You cannot contribute more to an IRA than you have earned in a given year. Interest, Ordinary Dividends, Short-term Capital Gains, Retirement income (pensions, distributions from tax deferred accounts, social security), Unemployment benefits, Worker's Compensation, Alimony/Child support, Income earned while in prison, Non-taxable military pay, most rental income, and S-Corp passthrough income Ordinary income is taxed the same as earned income with the exception that social security taxes do not apply. This is the ""pure taxable income"" referred to in the other linked question. Dividends paid by US Corporations and qualified foreign corporations to stock-holders (that are held for a certain period of time before the dividend is paid) are taxed at the Long-term Capital Gains rate explained below. Ordinary dividends like the interest earned in your bank account are included with ordinary income.  Stocks, Bonds, Real estate, Carried interest -- Held for more than a year Income from assets that increase in value while being held for over a year. Long term capital gains justified by the idea that they encourage people to hold stock and make long term investments rather than buying and then quickly reselling for a short-term profit.  The lower tax rates also reflect the fact that many of these assets are already taxed as they are appreciating in value. Real-estate is usually taxed through local property taxes. Equity in US corporations realized by rising stock prices and dividends that are returned to stock holders reflect earnings from a corporation that are already taxed at the 35% Corporate tax rate. Taxing Capital gains as ordinary income would be a second tax on those same profits. Another problem with Long-term capital gains tax is that a big portion of the gains for assets held for multiple decades are not real gains. Inflation increases the price of assets held for longer periods, but you are still taxed on the full gain even if it would be a loss when inflation is calculated. Capital gains are also taxed differently depending on your income level. If you are in the 10% or 15% brackets then Long-term capital gains are assessed at 0%. If you are in the 25%, 28%, 33%, or 35% brackets, they are assessed at 15%. Only those in the 39.6% bracket pay 20%. Capital assets sold at a profit held for less than a year Income from buying and selling any assets such as real-estate, stock, bonds, etc., that you hold for less than a year before selling. After adding up all gains and losses during the year, the net gain is taxed as ordinary income. Collectibles held for more than a year are not considered capital assets and are still taxed at ordinary income rates." Unless your investments are held within a special tax-free account, then every sale transaction is a taxable event, meaning a gain or loss (capital gain/loss or income gain/loss, depending on various circumstances) is calculated at that moment in time. Gains may also accrue on unrealized amounts at year-end, for specific items [in general in the US, gains do not accrue at year-end for most things]. Moving cash that you have received from selling investments, from your brokerage account to your checking account, has no impact from a tax perspective. I believe this depends on the broker's policies. For example, here is Vanguard's policy (from https://personal.vanguard.com/us/whatweoffer/stocksbondscds/brokeragedividendprogram): Does selling shares affect a distribution? If you sell the entire position two days or more before the dividend-payable date, your distribution will be paid in cash. If, however, you sell an entire position within the two day time frame of the security's payable date, the dividend will be reinvested, resulting in additional shares. Selling these subsequent shares will require another sell order, which will incur additional commission charges. Dividends which would have been reinvested into less than one whole share will be automatically liquidated into cash. If you want to guarantee you receive no fractional shares, I'd call your broker and ask whether selling stock ABC on a particular date will result in the dividend being paid in shares. Yes, as long as you own the shares before the ex-dividend date you will get the dividends. Depending on your instructions to your broker, you can receive cash dividends or you can have the dividends reinvested in more shares of the company. There are specific Dividend ReInvestment Plans (or DRIPs) if you are after stock growth rather than income from dividend payments. If it's anything IG that's likely an annualized figure. I previously sold CP over short term windows at 1% annualized. Else, it would generate a high long term gain, but you need to weigh a variety of factors versus gains, particularly if you're investing any meaningful sum of money. I'm not a bond trader.   Unless it's some kind of payday loan...