January 15, 2014
What is the difference between a no-load mutual fund and a load mutual fund? Why should you care?
What is the difference between a no-load mutual fund and a load mutual fund? Why should you care?
A no load mutual fund does not give any commissions to people in the financial industries. They want a cut of YOUR money so they like to have the loaded mutual funds to siphon money over to them via commissions. We should care because we could make more wealth by keeping the financial brokers out of our investments and investing in no-load mutual funds at Vanguard.
You got that right, Alex. No-load means no commission. Load means you pay a commission to one of the financial industry “helpers.” This would include financial advisors, many life insurance agents, and all brokers. NEVER pay a load!
You do not get a better investment just because you are using a “helper” to purchase it. Actually, you are getting a poor product because he/she will put you in a managed fund with high yearly fees that will underperform the index that it tracks. Empirical evidence continues to provide these facts time and time again. So what do you do?
When investing, focus on no-load index mutual funds in your company retirement plan and outside of that plan in a Roth IRA or taxable accounts. Follow Alex’s recommendation and go to Vanguard.com to purchase the lowest cost broadly diversified no-load index mutual funds. Your financial future will thank you!