Taking a Level Load Off of Your Retirement

A level load is a term that is used to describe the fee structure of certain shares of mutual funds. Here are a few things to consider about level loads and how they work.

Level Load

In the past, you would be able to choose between paying a fee on the front end or back end of a mutual fund transaction. Class A shares have a front end load while glass B shares have a back end load. With the level load, you are paying a percentage of the earnings from the mutual fund back to the fund each year. This is a fixed percentage that is assessed throughout the life of the mutual fund. This is also known as the 12b-1 fee. 

Purpose

These fees are assessed in order to pay for marketing and distribution costs for the mutual fund. If you see an advertisement for a mutual fund, it was paid for by the level load fee.

How Does It Affect Investments?

This type of fee is not popular with investors. It does not help the investors in any way, but they are still charged for it. Since this money is coming out of the returns from the portfolio, it actually decreases the amount of profit that is available for investors.

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