- No load funds can save on commissions and fees, but require you to do all the research and work
- Load mutual funds can cost more, but the broker or advisor does all the research and work
- A mutual fund cost calculator can help you do the work yourself and save substantially
The differences between load mutual funds and no load funds are numerous, and both fund types have benefits and drawbacks. Many people prefer funds with no load fees and no fund redemption fee, which is just another name for a back end load fee. No load mutual funds and commission free stock trading options let you invest your money without having to pay any broker fees, load fees, or commissions, which means that all of your investment capital goes into the fund and starts to work for you immediately. The downside of these investment options is that this also means you have to do all of the research and comparisons, and make your own investing decisions instead of letting someone else make them for you. A mutual fund cost calculator can help you determine the exact costs of these investments, and you can do all of the required research yourself, so that you invest the commission you would have paid to a broker or financial advisor.
This does not mean that you should never invest in load mutual funds, or that no load funds and commission free stock investments are always the way to go for every single investor and situation. When you invest in mutual funds which have load fees, you are basically paying a fee to have the broker take care of all the research and work needed to determine the best investment products for you and your investment needs. With funds and stock that do not have commissions or load fees, you have to take care of this research and work yourself. For some investors this may not be the right choice for a number of reasons. You may be very short on time, and thorough research and investment comparisons can take extended periods and require a lot of work. If you are a beginning investor, you may want to have professional investing advice until you are more comfortable doing these things yourself. If you are investing for long term goals, a fund redemption fee may not bother you if it is only charged for a short period and you know you will leave your capital in the fund for longer than the fee applies to, because it will not affect you ten years from now.
To determine whether load mutual funds or no load funds are the best investment option for your specific needs, goals, and situation, you must determine a number of things. Do you have the market knowledge needed to accurately assess the best investment options? Do you want or need professional investing advice? Do you know a broker that you trust and who has no conflicts of interest? All of these factors will determine whether you can invest without financial advice from a professional, and do it profitably and successfully. You should only make investment decisions that you feel comfortable making, and leave any others to the professionals or do the research and learn so that you are comfortable.
If you choose no load funds for your investing, there are some things you need to determine to make sure the funds you choose truly are no load funds. Which funds have load fees or involve a fund redemption fee? How much is the 12b-1 marketing fee percentage? What is the fund operating expense ratio? A mutual fund cost calculator is just one of the tools you can find online to help you make the best investment choices for your capital and investment needs, without needing a broker or paying unnecessary costs, fees, and commissions. Instead of paying someone else to determine what is best for you, no load mutual funds allow you to make this decision instead, while saving you substantially on load fees and broker commission. This does involve significantly more time and effort though.
April 17th, 2009 at 12:52 pm
I tried using one of these calculators to do it myseld and just managed to confuse myself even more. If you’ve the head for numbers and the free time, go for it and save yourself money. If not, it’s work hiring a broker.
May 19th, 2009 at 12:25 pm
Being able to do no load funds is a great advantage with all the money I save from doing it myself. If you don’t understand it I suggest you learn so you too can save money on your investment.
May 24th, 2009 at 1:17 pm
I honestly seems like with all the money that you can save doing these no-load funds it would be worth the effort to gain a better understanding for them. You would need to look at it as not only a money, but also a time investment.
May 25th, 2009 at 7:53 pm
I’m in the same boat as you Archie. I honestly don’t have the time to sit and learn all about this type of investment. I had to hire someone to do all of the work for me, which cuts into my investment but is a much safer way to go for me.
May 26th, 2009 at 9:49 pm
I’m starting to take a look at these investment opportunities. They are a lot more complicated than they seem on the surface. I’m starting to think that I’m going to be way over my head trying to tackle these on my own.