Why you should invest in No Load Funds

Now, more than ever, is the time to know how to make your money work for you. With some research and a willingness to learn you can invest your money so that it will grow. No-load mutual funds are a good way for the average investor to get involved in the financial markets. Mutual funds are pools of  money from groups of  investors and they invest this collective sum into stocks, bonds and various other investments. Your money will be professionally managed with the goal of benefitting all shareholders in the fund. The best of these are the no-load funds. Shares in no-load funds are sold without a commission or sales charge. This can save you on average 5 -6 % on your initial purchase. For example if you invested $10,000 with a 5% load, you would actually only be buying $9,500 worth of shares. Some funds have the load on the back end, meaning when you sell you pay the commission on your initial purchase and the gains. When you look at the numbers, I think you will agree that the no-load funds are the better choice.

The key to having a successful long-term, stable and profitable portfolio is to diversify your investments. For some investors the process of diversification includes investing in both. Investing in stocks takes a considerable amount of research and understanding of the market sector you are investing in as well as how to read a companies earnings report so that you can stay up to date with the companies prospects. With mutual funds after you have done your research and settled on your investment choices, you let the fund manager take over. These professional managers have many years of experience. They are the experts in selecting and evaluating investments for the fund. They make all of the buying and selling decisions which relieve the individual investors from that responsibility.

When you invest in mutual funds,  you have access to the services of a mutual fund manager. What this means is a professional is handling the daily trading of assets on your behalf. The mutual fund manager oversees the investment portfolio, and he is responsible for finding the best possible returns for the investor’s dollar.

When you’re ready to invest, you can choose to invest a lump sum or open the account with the minimum investment required and make regular investments in the fund. This can be set up through your bank which makes reinvesting easy. One option is to purchase shares through a major discount brokerage. You will be able to choose from hundreds of no-load funds and while no-load funds can be purchased this way the brokerage firm does charge a transaction fee. These fees are usually reasonable. A second option is going to a no-load fund family like Vanguard, Fidelity, or T. Rowe Price.

The small investor does not get left out of the markets either. There are plenty of companies out there that will allow no-load mutual funds that an individual can open with as little as a  $100.00 and $25.00 to add to your investment. If you have $500.00 to get started, you will have many more options. How to find these and others will be discussed in the next section.

Perhaps the best place to start you're search is at morningstar.com. They are arguably the tops in their field and you will see financial publications often refer to the Morningstar rating of a particular fund. This a great place to start your research and they have a fund screener that will allow you to set the criteria for the type of funds you are looking for. Just fill in as much information as you can and click “show results.” Make shore you specify no-load funds in your search. You will be provided a list of all the funds that met your search criteria. Click on the ones that interest you and you will see charts showing past performance and options to view other statistics and a prospectus. It’s important to note that past performance is no guarantee of future success. Regardless of how much you start with the important thing is to start for the sake of your financial security. Mutual funds are long term investment instruments and not meant to be traded like stocks.

Mutual funds, like most investments are not without risk but historically the better ones have performed well over time. An important thing to remember is not to panic when the markets start going down, but rather continue to invest on a regular schedule and your cost will average out over the long run. The markets historically have had their ups and downs and since you are investing for the long term it’s actually a good thing if you get to buy shares during a downward cycle. During those times the stocks will be cheaper and you can accumulate more shares. Another thing to consider when someone tells, you should put your money where its safe like a CD. CD’s are earning a rate well below the real inflation rate. If your money is, there its real value is shrinking every day because of inflation. One final thought. If the markets crashed tomorrow and corporate America was bankrupt how much do you think that CD will buy you. In that dooms day scenario it won’t really matter where your money is.