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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
Wednesday, November 07, 2007
MBA Embed: Learning the Ropes at Darden
Alex Duncan
FOXBusiness
Charlottesville, Va.--The decision to attend business school is not an easy one.
Believe me, I know.
Even after all the effort and
expense of the application process, when it comes time to giving up a steady income and job security for the debt and demands
of school, self-doubt and indecision creep back into the picture. The sentiments that you laid out so well in your application
essays (in answer to the always-asked “Why business school?” question) suddenly seem distant and unclear, and the comfort
of the status quo so familiar and easy.
But I didn’t succumb to the temptations of continuing employment,
choosing instead to attend the Darden School of Business at the
It
has already, without question, been both the most challenging and rewarding educational experience I’ve had. Darden is infamous
as the “boot camp” of business schools. (The administration would probably prefer I say “rigorous,” but it’s not quite as
catchy.) And there are days when I think I can’t keep up. But those moments are just as often balanced by the times when the
hard work and teamwork (social learning is at the heart of the Darden method) lead to “eureka” revelations, when the fog lifts
and a concept becomes clear.
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