This is a topic I feel very passionately about because I truly believe that many investors are being ripped off by loaded mutual funds. There is absolutely no reason to be allowing a mutual fund company to take advantage of you by charging you a massive load (fee) just to own their fund. What are mutual fund loads? They are fees charged by the mutual fund when you make a transaction inside a particular fund. These fees are generally either right at the time of purchase (front-end loads), or when you sell the shares in the mutual fund (back-end loads).

Top Four Reasons to Avoid Loaded Mutual Funds

1. They drastically drag down your overall return on investment- A fee of around 5% (which is the average mutual fund load), will drag down your overall return on investment in a hurry. Forgetting to include this fee in your overall return on investment is a major mistake.
2. They perform no better than a no-load fund- It’s not as if you are getting a superior product here. The truth is loaded mutual funds perform no better on a year-to-year basis than no-load funds. In fact, some investors find that loaded funds do worse because they are more worried about selling their product to financial advisers than picking great stocks.
3. There are tons of terrific no-load funds- There is no excuse such as saying there aren’t enough n0-load mutual funds to pick from. Indeed there thousands of no-load mutual funds which have a proven track record of outperforming the market.
4. You don’t want to line the pockets of a salesperson- Let’s face it, a loaded fund is simply lining the pockets of a salesperson for this mutual fund. In this transaction what happens is the customer gets screwed and the salesperson gets rich. We don’t need any of that.

Make those loaded mutual funds a thing of the past because they certainly aren’t doing anything to help you.