June 18, 2013

There are generally three types of loads in the investing world? What are they and who is getting paid?

4 thoughts on “June 18, 2013”

  1. Katherine Graham says:

    The three types of loads in the investing world are: load managed mutual funds, no-load managed mutual funds, and no-load index mutual funds. Loads = commissions. The financial industry/salesmen (investment brokers, life insurance agents, and other “experts”) are who is getting paid.

  2. Mike Finley says:

    That was a good attempt, Katherine, but you were a bit off the mark. Try again.

  3. Macala Mennen says:

    3 types: Open End, Closed End, Unit Investment

    Open-end mutual funds must be willing to buy back their shares from their investors at the end of every business day at the net asset value computed that day. Most open-end funds also sell shares to the public every business day; (Professional Investor is getting paid)

    Closed-end funds generally issue shares to the public only once, when they are created through an initial public offering. Their shares are then listed for trading on a stock exchange. (Professional Investor is getting paid)

    Unit investment trusts or UITs issue shares to the public only once, when they are created. UITs generally have a limited life span, established at creation. Investors can redeem shares directly with the fund at any time (as with an open-end fund) or wait to redeem upon termination of the trust. Less commonly, they can sell their shares in the open market. (Individual Investor gets paid)

  4. Mike Finley says:

    I am so impressed with your answer, Macala. It wasn’t quite what I was looking for, but you certainly informed us on some very good information. Here is the answer to my poorly worded question.

    The three types of loads are: Class A (front end load), Class B (rear end load), and Class C (load that lasts the duration in which you own the investment). In all cases the broker is the one getting paid. Maybe the financial firm is getting a bit as well, but most of the money goes to the middleman. How can this be avoided?

    Avoid all loads when investing your money and that means avoiding all middlemen (financial advisors, investment brokers, life insurance agents, etc.). This can be done by going straight to the financial investment company like Vanguard. Why? Less of your money gets syphoned off during the process. This translates into higher returns for YOU. Educate and ACT. You will benefit!

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