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Are you interested in investing in mutual funds but can’t figure out what a load or no load is? When a mutual fund charges fees such as a commission or set up fee, it is called a load mutual fund. No load funds do not charge any fees.

Just by looking at the definitions, you probably assumed that a no load fund is better. While I’m not telling you otherwise, you really need to understand the situation at hand to really get a grasp of it first.

When you invest in mutual funds, you are cutting out virtually all the time you would have otherwise needed to spend on research and the such. The fund manager does this for you and does it well with a properly diversified portfolio. Diversification is the key to reducing risk in your portfolio.

As with any kind of investment, you want to get the highest return possible. In order to do this, you need to maximize your direct return and minimize your expenses. Choosing no load funds will eliminate virtually all your expenses.

With load funds, you will supposedly get an above average return. Nobody can guarantee you an above average return. You could pretty much get an above average return just as likely with a no load fund as you can a load fund.

Let’s say the load fund did get a higher return than the no load fund. After fees and commissions are paid, you could very likely end up with the same return or a lower return than the no load mutual fund.

So which is better, load or no load? Generally you will do better with a no load. The less you pay in fees the more money you’ll make. If you want to increase the chance to make a larger return, choose a mutual fund with higher risk. Higher risk means a better chance of a higher return.

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