There have been stories in the news lately of mutual fund managers taking part in some unfair practices. In one case, some traders were allowed to purchase or sell shares of a fund after closing time at the day’s price instead of at the following day’s price.
Even with this attention, and other problems like hidden fees, people are still saying that mutual funds are the best way to invest. I would have to agree. People have to keep in mind that there are fees built in to the fund’s prices though. I had been making a monthly investment in a mutual fund. It wasn’t until later I realized that the 5.75% up front load fee was being paid every month I made a purchase. I was buying the fund for 5.75% more than its actual price. Previously, I had thought that an up-front load fee was paid only once at the time of the initial investment.
I have since ceased investing in that fund, and I have chosen a no-load, no-fee index fund for my Roth IRA instead.
Published or updated September 8, 2003. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.