How We Used To Sell Mutual Funds With a Load and Why

There are many types of mutual funds but in the end it comes down to no-load or load.  No load funds cost nothing to buy or sell.  Loaded funds are either front end loaded which cost you immediately to buy them (sometimes referred to as A shares) or back end loaded which have a surrender period up to five or so years (sometimes referred to as B shares).

We used to sell loaded mutual funds simply because they paid us the most.  We used to convince people to buy these products using smartly crafted literature from the mutual fund wholesaler which pointed out that their fund was the best over this period of time and therefore .... you get the picture.

Here's the scary part, after we would SELL you a mutual fund with a front end load of say 4-5%, we would then  put you in the rolodex to call back in a year or so to sell that mutual fund and buy another, this time a B share fund and tell you there was no cost to you.

This was technically true because you already paid 4-5% a year ago and probably forgot about it (if you ever knew in the first place) and now you bought the second mutual fund which has a back end load of another 4-5%.

We just made 9-10% commission on your money!

If anyone asks you to buy a mutual fund, get the symbol and check at yahoo finance or directly with the mutual fund company regarding the commission, if any, surrender charges, etc.

Remember, no one cares as much about your money as you do, invest by yourself and for yourself.

Scared of the stock market? Try dollar cost averaging!

The stock market is a scary place to invest your money these days, however there really isn't much of an alternative with fixed income paying almost nothing so what to do?

I suggest selling your stock mutual funds or etf's when you are feeling very uncomfortable or giddy with your investments and then jumping right back in via dollar cost averaging.

Dollar cost averaging is the process of buying on a regular basis or in increments so as to ideally get a good average price and dollar cost averaging works well with the volatility that we have been witnessing lately.

Sure you may miss out on some of a rally but you may miss out on some of the downturn too?!  This strategy is not for everyone and does entail some fees but bottom line is that it'll keep you in the stock market to some extent and keep some of your sanity as well.

Of course, if you have any questions, remember that I am a money coach and am happy to answer questions or concerns you may have.  Email me at scott@howtheinvestmentbusinessreallyworks.com.