No-load funds are those that you can buy and sell without paying a sales charge. Load funds carry sales charges and are typically available to those who invest with a broker or financial advisor. It's true that your overall investment costs will generally be lower if you go the no-load route.
But Christine Benz, author of the "Morningstar Guide to Mutual Funds," claims frugal investors should not automatically shun load funds. "If you're not comfortable putting together an asset allocation plan, selecting specific funds and monitoring that portfolio, then paying an advisor or broker to do it for you can be money well spent, even if it means paying a sales charge to buy or sell," she said.
Certified financial planner Ivory Johnson of Delancey Wealth Management said all things being equal, loaded mutual funds have several disadvantages that are important to consider relative to no loads. First, the load reduces your initial investment. Second, since you've paid "extra," you're less likely to sell if it performs poorly. And if you do sell and want to avoid another sales charge, you'll have to exchange within the same fund family.
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