No load mutual fund
I am not a big fan of mutual funds at all. I like that they are low maintenance and you are instantly diversified right when you buy them, but the fact is that 80% of mutual funds lose to the market. Those are not good odds. I would much rather see investors put more money into index funds.
However if you are going to invest in a mutual fund, which isn’t a terrible idea, investing in a no load mutual fund is the only right way to do it. Mutual funds that take either front loads or back loads do not offer a very good proposition to an investor.
A front load is where the mutual fund takes between 2-6% of your investment away on the spot. If you invest 10,000 dollars into a mutual fund that has an average 5% load, you only get 9,500 dollars worth of shares in the fund.
A back load is where anywhere between 2-6% of your investment is taken away whenever you sell the fund, which is just as bad as a front load.
Investing in a mutual fund is not a great idea in my opinion, but if you insist on doing so it is important that you focus on no load mutual funds that have low fees.