Minimizing Fees on Your Mutual Fund
With numerous fees to be found on a detailed statement from any mutual fund, it’s hard to be sure you’re not paying too much in fees.
When you are trying to make a decision on which mutual fund to choose, the easiest way to think about fees and charges is to look at the fund’s expense ratio. It is usually easy to find and easy to understand because it simply combines all the possible fees together and presents a percentage of your investment that will be used for fees.
But if you want to know what some of the actual fees are, a recent Financial Planning summary helps us out:
- Management fees are basically what the fund uses to pay its management and employees, and they’re usually less than one per cent per year.
- Administrative fees cover other costs of the fund, including mailing, record keeping and communications, and they are on average less than half a per cent per year.
- Sales charges or loads are a percentage applied to the purchase in a fund - although some now offer ‘no-load funds’. Pay attention to these because some funds charge up to five per cent per year.
- Marketing and distribution fees also exist for some funds, but not all.
This entry was posted on Tuesday, October 28th, 2008 at 5:06 am and is filed under Investing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
