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Some mutual funds want you to pay for the privilege of them (or your investment adviser) taking your money to invest. It's called a load, and it works like a cover charge to get into a nightclub. Luckily, there are such things as no-load funds. As the name implies, shares of these funds are sold without a fee paid to a broker or investment advisor.
The entire amount you invest in no-load funds goes to work for your returns. On the other hand, with load funds, right off the bat you're charged commission (not to mention other fees incurred over the life of the investment). Let's say, for example, you invest $25,000 into a load fund that charges a 5% commission. This costs you $1,250 off the top, bringing your actual investment down to only $23,750.
The often-cited horse race analogy argues against investing in load funds. Here's the logic behind it: Would you place a bet on a horse that had to start a race 200 yards behind the others? Well, maybe you would if you got a tip from a sketchy, trench coat-clad man in a dark alley. However, under most circumstances, it's not smart to put your money on that handicapped horse.
But some argue that at times that man in the trench coat (aka your broker) knows more about the horses than you do, and has a better shot at picking a winner. Also, sometimes these fees are unavoidable because some funds are available only through investment advisers.
Cost-benefit analysis can help determine when a load fund is worth it (in other words, when it will score you a load) and when it is better to "do it yourself" and avoid the fees. Load-fund fees range depending on share class and can cover a variety of costs, such as paper work and fund management.
Home / Personal Finance / Financial Planning / College & Education
Friday, November 02, 2007
Graduate School: Don't Be Forever in Its Debt
Kathryn Elizabeth Tuggle
FOXBusiness
NEW YORK--Imagine a day when not one of the top 10 fastest-growing jobs requires a master's degree. Well, listen up, all would-be grad
schoolers: You live in one.
According to the Bureau of Labor Statistics' 2007 Occupational Outlook Handbook, the top
10 fastest-growing jobs require nothing more than a bachelor's degree. Those expanding occupation fields are home-health aides,
network-systems analysts, physicians' assistants, computer application-software engineers, physical-therapist assistants,
dental hygienists, computer-software engineers, dental assistants, home-care aides and computer-systems administrators.
Yet
statistics show more people are getting master's degrees (and, in turn, racking up an average $31,700 in loan debt) than ever.
Experts agree there's a disconnect.
Anya Kamenetz, author of Generation
Debt: Why Now Is a Terrible Time to Be Young" wrote in a recent Village Voice column that graduate school offers an
"exciting new road to poverty."
"I don't believe that people should ever go into serious debt -- over $20,000 -- in
order to get master's degrees in the arts." Kamenetz wrote. "I think even if you have to get an internship or volunteer at
a nonprofit organization, do it. Working for free to get experience is cheaper than paying to go to school and deciding you
don't like something."
Some disgruntled, unemployed master’s recipients use online networking to spread one lesson
they learned: a master's degree isn't a job guarantee.
A group on social-networking site Facebook -- named "I have
a master's degree and I'm unemployed" -- is the brainchild of Jenelle Jefferson, 26. She said she was inspired to create the
group when filling out the application for her Facebook account.
"It asks for your employment info and, you know, I
didn't have any," said Jefferson, a graduate of N.C. State's Operation Research master's program.
Over the last two
months, Jefferson said she has applied for about 25 jobs--and has only received two calls.
"There is such a thing
as being overqualified," she said. "These places didn't want me because they thought they would have to pay me more. Why should
they hire me when they can hire someone with a bachelor's who can do the same work for less money?”
Jefferson said
she believes her master's degree even kept her from getting work as a receptionist. "They wouldn't talk to me because they
thought I wouldn't stay there for very long, or because they thought I had too many degrees," she said.
Statistics
show the inspiration to go to graduate school may sometimes be more about an increase in salary than a well-respected job
or title. According to 2006 figures from the Bureau of Labor Statistics, the average weekly salary for a person with a bachelor's
degree is $962, while those with a master's degree earn $1,140.
These figures, however, don't reflect the amount of
debt the average master's graduate typically carries compared with those with just a bachelor’s. Student-loan company Nellie
Mae reports that the average monthly loan payment for graduate students is $388, an amount that would keep the average post-grad
in debt for an added 10 years.
However, some master's degrees are required for specific career fields, such as medicine,
business and law. And opponents admit going for the post-grad degree isn’t always a mistake – as long as you 1) take time
off after college and 2) choose the right program.
In other words, figure out what you want beforehand.
"I
think it's crucial to get work experience as close to your field as possible before you go back for a master's degree,” Kamenetz
said.
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