Comments on: Should I Buy a Loaded Mutual Fund?

By: PipsMiner

PipsMiner — Wed, 26 Aug 2009 06:10:49 +0000

Mutual funds are a bit scammy because of the way brokers earn commission. In Australia most mutual funds won’t let you go direct so you have to deal through a broker (more reason to put your money elsewhere I say)

By: Eric (An Actual Broker)

Eric (An Actual Broker) — Thu, 12 Mar 2009 17:18:38 +0000

Oh, and Thomas, who allegedly works in the “financial services industry”. Would that industry by “Check-n-Go”? Because you know exactly f**k all about mutual funds (which puts you in good company here I suppose). Class C,B and A shares perform almost identically, and there is NO difference in how they are marketed or managed.

God save us from the ignorant.

By: Eric (An Actual Broker)

Eric (An Actual Broker) — Thu, 12 Mar 2009 17:13:52 +0000

Wow. You really have no idea what you’re talking about. Listen up everyone, Don’t listen to this joker. No load funds may look like a good deal, until you look at the annual fees associated with “no load funds”. Let’s look at American Funds, Growth Fund of America. Class A shares maintenance fee = .62% annual. Class C shares maintenance fee = 1.41%. And American Funds are probably the cheapest funds you’ll find in the real of 4-5 star rated funds.

Class C shares have a 1 year deffered sales charge, meaning you pay no load providing you hold the shares for at least 1 year.

Class C shares are generally a good idea if your account balance is less than $25,000. That way, you pay no up front sales charge, and the 1.41% annual maintenace fee won’t bite your account to bad. When you get to $25,000 though, you start to get “breakpoints” or discounts on the Class A shares. These discounts, combined with the MUCH lower annual fees associated with the A shares will greatly benefit your bottom line.

There are plenty of good brokers out there that really want to help you make money, find one. Don’t listen to this amateur.

BTW, you may have felt so very smarmy and superior when you shut down that bad broker, who was an idiot for not having the knowledge to put you in your place, but you aren’t doing your mom any favors by painting loaded funds with your wide and ignorant brush.

Go to school and get your series 7 if you really want to help people.

By: Jan

Jan — Sun, 21 Dec 2008 21:26:06 +0000

In July my husband and I took our accounts and moved them to Edward Jones. Now that I have had the time to do more research and have seen what it cost us I wish I had waited and done nothing, especially since the market starting crashing right after we got it. I feel trapped now because we paid 3.5% on everything up front. Isn’t it best just to stay now that we have already paid all the fees. He said after the initial start up cost there would be no fees. Am I right in believing this or am I in for more bad news. Due to the markets and the loaded funds we have lost $25,000 probably. HELP!
Thank you for anybody that can help.

By: Charlie (scary financial advisor)

Charlie (scary financial advisor) — Thu, 02 Oct 2008 12:30:37 +0000

All I can tell you is look at the rate of return, on average, of your loaded funds vs. your “no-load” funds. Not to meantion that “no-load” funds still have their fees and a lot of times end up being more expensive over a long term. The key is to know your time horizon for your investment. This will help you make the best choice. Also, if financial advisors didn’t get paid for the work they do, where in the world would you find any. There is a reason we study what we do and take the exams we do and continue with our education on the market as well as other financial products, this is one reason we get paid. If the advisor is only registered with one mutual fund, that is when you worry, otherwise, I would highly suggest it, unless you have the time and discipline to educate yourself on each one of the 10,000 mutual funds that are available to you. Good luck to everyone in their investment choices and I wish you all great success.

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Wed, 07 May 2008 15:02:09 +0000

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By: Thomas

Thomas — Wed, 16 Apr 2008 08:58:03 +0000

I work in the finanical services industry and sell both no load and mutual funds with loads. I would only justify selling somebody a C share if the time horizon was 5 years or less though. If your in longer than any A share will outperform the C share given the same investment. The thing that disturbs me about the recent posts to this is that you don’t seem to realize that most no load funds are only index funds and because they buy and hold an index of stock they are not truly actively managed. This also means that the expenses are lower because their is very little portfolio turnover if any. Loaded funds have higher expenses because their distributed exclusively through traditional sales methods, and because the team of portfolio managers spends alot of time managing the portfolio for the best return. So in summary to state that you will only buy index funds means that you don’t want to pay for the relationship and the active management of the fund. The best performing mutual funds over the course of history are loaded funds because they actually have an investment team making critical decisions about the fund on a daily basis instead of just an buying an index and hoping the overall market is up. Index funds are great for diverification of risk and lowering expenses at the same time but most mutual fund returns are eroded by TAXES not by sales loads.

By: hank

hank — Tue, 25 Mar 2008 03:00:02 +0000

@FFB – Yea, I’d just stay away from them in general – there are plenty good ones out there already to choose from.

@Bill – Sorry you had to learn the hard way, it’s sad that many of us have to learn that way, but the key piece is that you DID learn! A, B, or C shares are funds that I don’t and WON’T be in anymore. The person SELLING you these shares has THEIR best interest in mine, not yours!

Thanks for stopping by!

By: Bill

Bill — Tue, 25 Mar 2008 00:51:30 +0000

I’ve been learning the hard way. I had about 500K after sale of a home and from a rollover IRA. I made the mistake of going to Merrill Lynch (but it could have been any broker), who purchased all class C share mutual funds, and told me how great it was since I paid no commissions. What I didn’t understand (and I fully blame myself for not being educated) was the 12b-1 fees that contribute enormously to the expense ratio. The guy actually did lie to me when he said that the highest expense ratio of all the funds was 1.8%. Well, that’s bad enough, but what I found out was that didn’t include the 12b-1. He didn’t tell me about those. Bottom line, that 1.8% fund was really costing me 2.75%, and that’s year after year for as long as I own it. What a rip off. An Edward Jones broker warned me, but then they want to hit you up front with an A share load, which at my investment amount was 2.5%. So now my redemption period has ended on the funds, I’m better educated and still trying to learn, and I’m going to dump the C shares. I think you did the perfect thing for your Mom. Loaded funds of any type are not worth the extra cost. Fidelity, Vanguard, Schwab – they all have great no-load funds and are happy to help.

By: Making Money Journal » Posts I Enjoyed Reading This Week: Investing Edition

Making Money Journal » Posts I Enjoyed Reading This Week: Investing Edition — Mon, 18 Feb 2008 20:01:57 +0000

[...] discusses Should I buy a loaded mutual fund? When we were young and not so financial savy, we fell in to the Loaded fund trap. luckily I was [...]