BellaOnline Forums Money Investing Load vs No-Load Stock

Back over 10 years ago when I worked for a company I had a 401k. Since then I have rolled it over twice (I was confused about how roll overs worked - I thought they were free swaps like moving a bank account).

I am currently in four American Funds with a 3.5% sales load. The funds are:

* europacific growth fund
* growth fund america
* smallcap world fund
* wash mutual invest fund

I've been annoyed about this 3.5% sales charge for a while now. That is 3.5% of my money they take right off the top which then doesn't snowball for me. Over the course of decades that can add up to thousands of dollars lost.

I think since I've already paid that sales charge on the existing shares I have, I should just let them be. I can't lose any more money with them sitting there and the funds seem to be doing reasonably well.

However, I'm looking at Vanguard which has zero fees. No fees at all. So if going forward I started investing in Vanguard, I could find similar funds with similar return rates and have zero fees.

What do you guys think?

Hey Lisa,

I agree with you about load mutual funds. However, the American Funds are good funds when it comes to the investment choices they make and have a good long-term track record.

I do not personally like Vanguard funds despite the low fees. Most of their funds are basically index funds which simply mimic the performance of the stock market, which hasn't been a good idea for over a decade.

If you are going to invest that way, you should simply buy exchange traded funds (ETFs). They are just like mutual funds except with much lower fees and they trade like stocks on the stock exchange. You can buy them through any brokerage firm, even the firms that allow dollar cost averaging techniques like Sharebuilder.com and Folioinvesting.com.

Dear Tony -

I'm looking for example at my Washington Mutual Investors Fund. When I go to Vanguard it says the similar fund is their Value Index Fund. This fund has outperformed the Washington Mutual fund at the 1 year, 5 year, and 10 year rates. Plus year to date. In addition the Washington Mutual fund has an expense ratio of 1.5% while the Vanguard one has an expense ratio of .26%.

Wouldn't this mean it would be better for me to be in the Vanguard one?

Yes, it does.