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Hello there,
I'm new to this, and investing. What does the term no load mean, and what is it in reference too?
Sorry if this has been asked before, but I was not able to find an answer in the faq.
Thanks in advance.

--Boz
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I'm new to this, and investing. What does the term no load mean, and what is it in reference too?

Since I consider myself a rather new investor, it's so rare that I get to help someone else out. So here goes:

"No Load" refers to mutual funds that do not charge a fee for buying or selling shares. However it's important to note that this does NOT mean they're "free".

Mutual fund companies have all kinds of creative ways to get at your wallet: They can charge you fees to cover their advertising expenses (12-b), fees to help pay for the guy managing your fund, and many others. Also, Uncle Sam dips his hand into the pot too whenever your fund sells stocks within itself and causes you to realize a capital gain,or when the fund distributes dividends (whether or not you reivested them or took the check).

From what I've read, studies have shown that "load" funds don't necessarily grow bigger or faster than no-load funds, and once you take into consideration the amount of the "load", you're often worse off than the no-fee fund.
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Lollyinc --

<<From what I've read, studies have shown that "load" funds don't necessarily grow bigger or faster than no-load funds, and once you take into consideration the amount of the "load", you're often worse off than the no-fee fund.>

This may be true in some cases, but note that many load funds sport loads of 5% or more -- that's kind of enormous. It means you're losing 5% or more right off the bat (if it's a front-end load) or will fork over 5% or more upon withdrawal, if it's a back-end load.

Anyone interested can read more about mutual funds here -- it includes why we like index funds -- which sport extremely low or no fees in every category.

http://www.fool.com/school/mutualfunds/mutualfunds.htm

Cheers!

Selena
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