What is a No-Load Mutual Fund?
A no-load mutual fund is a specific type of investment and is discussed below after I give a brief description of a mutual fund.
A mutual fund is merely a pool of money gathered from hundreds or even thousands of investors like you.
Many people believe that this may be one of the best investments that you can make.
The manager re-invests the collective pool of monies into stocks, bonds, and other securities.
Usually, it takes a thousand dollars or more to open a new investment.
Any profits, gains, and dividends from the investments are divided pro-rata among all of the investors or shareholders.
An advisory fee is paid to the manager who makes the investment decisions.
The nice thing about this type of investment is that you don't have to research and decide what individual companies or securities to invest in, nor try to determine when to sell the securities in the portfolio.
The manager does that for you.
Additionally, your risk is diversified among many investment securities.
This type of investment is highly regulated by the federal government.
Warning: Like any other investment you can lose money that you invest.
The most common type of mutual fund is called a no-load mutual fund.
This type does not have a "load" or commission charged to you when you purchase shares.
All of your money is invested directly into the investment pool.
You can purchase shares directly from the mutual fund company.
Another type is a load fund, which is sold by brokers or advisers who advise the investor about what investments to buy and sell.
They receive a portion of your investment as a commission for acting as a salesperson.
So, with this type not all of your investment is invested directly into the portfolio of securities.
I suggest that you read the prospectus before investing.
The prospectus is a required disclosure document that describes a lot of information, such as its investment objective and fees.
You may also want to ask for a copy of the "Statement of Additional Information" which few people ever ask for.
This is a longer document than the prospectus but has much more detailed information, such as a description of the various types of securities that can make up the portfolio.
One last comment, make sure you compare the expense ratio of the mutual fund as disclosed in the prospectus and compare it with other investments with a similar objective.
What might seem like a small difference in expenses can really add up over 20-30 years and have a significant effect on your investment return.
A mutual fund is merely a pool of money gathered from hundreds or even thousands of investors like you.
Many people believe that this may be one of the best investments that you can make.
The manager re-invests the collective pool of monies into stocks, bonds, and other securities.
Usually, it takes a thousand dollars or more to open a new investment.
Any profits, gains, and dividends from the investments are divided pro-rata among all of the investors or shareholders.
An advisory fee is paid to the manager who makes the investment decisions.
The nice thing about this type of investment is that you don't have to research and decide what individual companies or securities to invest in, nor try to determine when to sell the securities in the portfolio.
The manager does that for you.
Additionally, your risk is diversified among many investment securities.
This type of investment is highly regulated by the federal government.
Warning: Like any other investment you can lose money that you invest.
The most common type of mutual fund is called a no-load mutual fund.
This type does not have a "load" or commission charged to you when you purchase shares.
All of your money is invested directly into the investment pool.
You can purchase shares directly from the mutual fund company.
Another type is a load fund, which is sold by brokers or advisers who advise the investor about what investments to buy and sell.
They receive a portion of your investment as a commission for acting as a salesperson.
So, with this type not all of your investment is invested directly into the portfolio of securities.
I suggest that you read the prospectus before investing.
The prospectus is a required disclosure document that describes a lot of information, such as its investment objective and fees.
You may also want to ask for a copy of the "Statement of Additional Information" which few people ever ask for.
This is a longer document than the prospectus but has much more detailed information, such as a description of the various types of securities that can make up the portfolio.
One last comment, make sure you compare the expense ratio of the mutual fund as disclosed in the prospectus and compare it with other investments with a similar objective.
What might seem like a small difference in expenses can really add up over 20-30 years and have a significant effect on your investment return.