There are three main types of fee-based mutual funds, each with pros and cons.

To help make sense of all this, here’s a quick overview of each type.

Class A Shares

For these types of funds, you pay most of your fees upfront. For instance, if you plan to invest $10,000 in a Class A share, you might have to pay an upfront fee of $575. As a result, your initial investment will be reduced to $9,425 on day one. However, Class A shares usually have the lowest ongoing expenses.

Class B Shares

These do not have an upfront fee. So, if you have $10,000 to invest, you can invest the full $10,000. However, Class B shares carry higher ongoing expenses. Also, it carries a back-end fee if the investment dollars are removed within an agreed upon period of time. This back-end fee is usually a declining percentage that’s reduced every year—for instance, 5% the first year, 4% the second, etc.

Class C Shares

Like B shares, these do not have an upfront fee. However, Class C shares do carry the highest ongoing expenses. On top of that, they also have what’s called a level load—an annual fee (usually 0.25%) on the net value of the fund.

Which should you choose?

While it might seem like Class A shares cost the most, over long periods of time they are usually the least expensive. By paying all your fees upfront with a Class A share, the money in your fund is allowed to grow virtually uninhibited by extra fees.

On the other hand, while Class B and C shares might seem like they’ll save you money, they more than likely won’t. Without charging an upfront fee, these shares require you to pay higher ongoing expenses that cut into your returns.

Typically, you should stick mostly with Class A shares—those with most of the fees upfront. Dave invests for the long-haul, and Class A shares are usually the best for fit for a long-term strategy.

When deciding on which class of mutual fund to invest in, talk with your financial advisor to determine the best choice for you. Find an investing professional in your area that Dave recommends.