Loaded Or Unloaded

Travis isn't sure of the difference between a loaded mutual fund and a no load fund for his Roth IRA investing.

QUESTION: Travis is investing in Roth IRAs, and asks Dave if he recommends a loaded fund or a no-loaded fund. Both for these reasons, says Dave.

ANSWER: Loaded refers to commissions, while no loaded means no commissions are charged. People mistakenly think loaded means cheaper; sometimes it does and others it doesn’t. All funds charge an annual maintenance fee. Sometimes the no loads charge such a high maintenance fee that you wished they charged a commission. So you have to consider all expenses. You can find your answer on the second page of the prospectus. Look in the little box on that page and find your expense ratio. That’s the amount of your money that’s going out the door in expenses. Look at what it’s been for the past 10 years and since its inception.

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