The latest hot craze in the investing arena is now no load mutual funds. While many have waited for a long time for this to come around, the dream come true status carries with it the usual oddities of questionable companies. As an investor, you may want to take advantage of the benefits, but how do you work with no load mutual fund companies?
If you are a neophyte, you need to know the difference between load and no load mutual funds. Historically, the best mutual funds were listed as load. It included costs that are associated with the investment: commissions and sales costs. The additional costs increased the investment and offset any possible margin gains that you would receive. Because they were the better selection, most investors thought it was worth the price. No load mutual funds were not quite as good, a bit more risky. No load meant that there weren’t any additional commissions. Typically these involved investments where a company might not have the longevity or may have had some questionable history or credit situations.
With the fluctuating market of the last few years, investors have become scarce. Those that do invest are being very very careful. In Nov. 2009, one of the big investment firms opened up their doors to include many of the best mutual funds to the no load selection. The purpose was to attract investors to their company with the glimmer of a better line of investment options. It took a few months, but other investment firms joined the array of no load mutual fund companies. With the gates opened, investors are now being given options like never before.
If you are considering investing in no load mutual funds, you need to make sure that the company you are working with is well established. That means they have been around for a while. Review their investment statistics over the last five years, minimum; ten years recommended. What kind of results have they brought to their investors? You should be looking for the companies that have a nice steady increase, no extreme spikes or dips.
The no load mutual fund companies that are the best have a larger group of choices for you that include individual as well as families of investment. The variety should include a broad range of investment types. Be wary of any company that focuses on one line of business.
While no load mutual funds are as attractive as beach front property, there are some hidden factors. Make sure the companies that you are considering do not have hidden fees for their no load mutual funds. These are usually an annual fee, disguised as a management cost. This will reduce the value of your investment and, when you do the numbers, could actually cost more than a load mutual fund.
Always request a prospectus for any investment that you are thinking about. Investment firms make these available to you and the process should be easy. Don’t accept any excuses if this is not the case. Move on.
If you simply aren’t sure what to do, it would be advisable to hire an investment counselor. Their knowledge is well worth the dollars spent, because they do this for a living and will have more information at their finger tips than you could find on your own in weeks.
