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What are Mutual Funds? What are No-load
Mutual Funds?
A mutual fund is a pool of money contributed
by numerous investors. The fund manager(s) then decide how
to invest the money. The funds could be invested in stocks,
bonds and/or numerous other types of investments. The more
an investor contributes, the more shares they own of the mutual
fund. The two major benefits of mutual funds are diversification
(for a relatively small amount of money you will be invested
into many companies) and professional management. Unfortunately,
professional management doesn't always mean high returns.
All mutual funds charge administrative and
management fees. Some funds also charge a sales commission
on top of the other fees. Basically this commission is similar
to a real estate agent's commission. It's paid to the real
estate agent who helps you find a property to buy.
Loaded mutual funds are
similar to buying a house through a real estate broker. The
broker (in this case a stock broker) hopefully helps you find
suitable mutual funds and they are paid a commission (also
known as a load) for doing so.
No-load mutual funds are
similar to those houses that are being sold by the owner.
There is no broker to guide (or misguide) you and there are
no commissions to be paid. You are on your own unless you
seek guidance, and that's where we fit in: our investment
newsletter is designed to replace the biased
advice of a stock broker with independent advice to help
you earn returns higher than the stock market averages.
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