March 3rd, 2013
In the world of investing, what is a load? How can you avoid it?
In the world of investing, what is a load? How can you avoid it?
Load is the management fee charged by the investment manager. Instead of paying mgmt fees, look for index funds from vanguard and tiaa-cref with no load and low fees.
You have the basic idea, Aaron, just a few words need to be added. A load is a commission. That commission is paid to the investment advisor who most of the time earns his pay from other commissions based on the particular investments he recommends. This conflict of interest should clearly show you why you must stay away from people like this when educating yourself about different types of investments.
You can easily avoid paying a load by going to places that Aaron mentioned. No-load Mutual Fund Families such as Vanguard (my favorite), Tiaa-Cref, USAA and T.RowePrice. Fidelity also has many no-load funds. With these families you simply bypass the broker and invest your money directly with the mutual funds under those families. Bottom line: Do not pay a load and focus on reducing your investment expenses to the lowest possible denominator. Vanguard does it better than anyone I know.
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