What's the Difference Between Load and No Load Funds?

Investing is a wonderful way to grow your money, but the terminology with it can scare some people. Just by taking 5 minutes, you can learn some useful information on mutual funds. It can go a long way on your retirement investing decisions. Today I'm going to look into load and no-load mutual funds.

What is a mutual fund?

Wikipedia describes a mutual fund as:
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.

What is a load mutual fund?

It's basically a mutual fund with an extra sales cost.
If you have a front load mutual fund, you pay to buy into the fund. If you have a back load, you pay when you sell your fund. A no load fund may have administrative costs, but it is not supposed to have a sales cost.

Does a load mutual fund benefit me?

The load is a commission that has no real benefit for you. The Fool.com observed:
By Elle
Elle is the owner of Green Panda Treehouse, a personal finance web site for college students and new graduates.

Copyrighted 2020. Content published with author's permission.

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