Why Choose No Load Investing?

For those of us that didn’t make out during the dot com boom or don’t have unlimited funds to play the market like a lotto, investing is a very serious business. The most recent market losses for many who had their retirement money invested and lost, you are being very careful as well as skeptical. Selecting load funds involves paying out commissions on the investment. This reduces the overall gain. Why choose no load investing?

Mutual funds as a whole offer an incredible array of diversity. In developing a good portfolio, diversification is the key. This will give you an opportunity to keep a good balance. As an example, if one or two of your investments turn out to have a loss, the gains made by the other investments will keep everything in check. The loss will therefore not be as much. Another positive side for mutual funds investing is that you typically don’t have to put in hours of grueling research. The best investment firms have already done the homework and you can take advantage of their research.

One of the main deterrents for a lot of investors has been the commissions paid on the load fund investing. If the gains take a longer period of time, the commissions offset any profit margin and can therefore be a wash. To encourage movement in the market, many investment companies are addressing this topic and have introduced very competitive and high ranking investment funds in the no load category.

No load investing increased the potential margins for profit as well as a better balance if there is a loss. The overall gains can be more due to the fact that you aren’t paying the commissions. You do have to examine your investments closely. In some cases, the no load investing concept can be misleading due to the fact that the gain itself is lower than a load fund.

The rationale for investment firms opening up many of the higher grade and family funds to the no load process is obvious. The market needs an infusion and the best way to get this is to encourage those people that are holding onto their money, to invest. No load investing has the earmark of the next greatest venture by offering some of the best investment opportunities without the lowered risk of paying commissions.

Is no load investing really no load? While the investment firms are offering high level category funds as no load, you need to be aware of other charges that can be incurred. Some of the brokerage firms are representing the funds as no load, however, there are annual fees that are charged that are referred to as custodial or managerial fees. These can be as high as 1.5 percent of the overall gain. If you do the math, you will see that these charges can actually be higher than the commissions on a load fund.

Before you go leaping forward with your cash in hand, make sure that the investment firm you are dealing with doesn’t have any of the managerial fees and that they are offering a competitive rate with others that are out there.