Paying less is better than paying more. But paying nothing
is the best of all.
I recently saw something that immediately went in my "Odd
Advice" file.
Moneymagazine offered a tip that if you invest
fairly large amounts into certain mutual funds via a broker,
you may be charged a
lower sales load. (A load is a fee that some funds
charge, typically when you buy into the fund.)
One example was the
American Funds Amcap (AMCPX) fund, which
sports a listed 5.75% load. Investing $50,000 in the fund can
cut that to, uh, only 4.5%.
Moneypointed out that if you made a $50,000
investment, this lower load would save you $625.
To this I say: Why pay the load at all? If you invest
$50,000 (and, come on, does the average reader really have
that kind of money to park in a fund?), the 5.75% load will
lop $2,875 off your investment from the get-go. If it's
dropped to 4.5%, you'll only get a $2,250 haircut. Sure, you
save $625 -- but
you lose $2,250! That's a lot of money, and also an
unnecessary loss.
I'd advise you instead, when you're tempted by a seemingly
compelling load fund, to look around. You'll likely find some
even more
compelling and relatively similar no-load funds. Check
out the alternate large-cap equity fund options below, for
example.
Fund
Top Load
Expense Ratio
10-Yr. Avg.
Annual Return
Top Holdings
Recently Included
American Funds Amcap
5.75%
0.71%
4.1%
Yahoo! (Nasdaq: YHOO),
Oracle (Nasdaq: ORCL)
Fidelity Contrafund (FCNTX)
N/A
0.94%
4.8%
Wells Fargo (NYSE: WFC),
McDonald's (NYSE: MCD)
Mairs & Power Growth (MPGFX)
N/A Continued... |