What's the difference between a load and no-load mutual fund?

Investing, Mutual Funds
Sort By:
Most Helpful
August 2016
100% of people found this answer helpful

Bluntly, a no-load mutual fund is one you might possibly want to consider. A load mutual fund is one you should never, ever consider.

If you invest $10,000 in a load mutual fund with, say, a 5% load, that means you are actually only investing $9,500 with the institution pocketing $500 of your money the moment you invest it. Over time and with compounding, that immediate loss of $500 can prove VERY costly. And it's not as if you are getting anything for your $500 that you couldn't get elsewhere for nothing! DO NOT EVER INVEST IN A LOAD FUND.

If you invest the $10,000 in a no-load fund, that full $10,000 gets invested. 

Frankly my advice would be not to invest in mutual funds at all, load or not. Exchange Traded Funds (ETFs) are a far more cost-effective and tax efficient way to invest. 

July 2016
February 2005
July 2016
July 2016