Last week I had an
interesting conversation with a prospective client. He said, “Why do I need a person like you
when I can find my own investment and not pay any fees or charges?” I asked him specifically if he really
believed that he could get an investment ‘free’. He responded by saying, “Yes.” They told me this is a no-load fund so I get
this investment without any charges whatsoever.
Please keep in mind that
anytime you purchase an investment, THERE IS A FEE, A CHARGE YOU PAY FOR THE
MANAGEMENT OF YOUR INVESTMENT. There are
essentially three ways ANY investment receives compensation. As I said in the title, “There is No such
Thing as a free lunch.” What is a common
mistake by investors is the term “no-load.”
No Load means there is no front-end charge nor any surrender
charge. But there are charges.
Charges come in the form
of a MANAGEMENT FEE. This is a fee that
you, as an investor, pays a team of money managers to buy and sell a portfolio
of individual stocks and/or bonds. There
are various classes on investment mutual funds and we will be discussing them.