A load is just a fee charged by the mutual fund. If it is charged when you buy the units, it is called an entry load. If it is levied when you sell the units, it is referred to as an exit load.

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Let's say I invest $30.000 in a no-load mutual fund. How much of a return may I expect after a seven year period?

That depends on several factors some of which are dependent upon you and others which are dependent upon economic conditions. One of the factors is the type of mutual fund you decide to invest in. There are many types available. Besides the type, there is also the expenses of the mutual fund that are a factor, the management of the mutual fund, and the cash flow into and out of the mutual fund. Also the point of entry of your $30,000.

A rule of thumb is that in general an equity based mutual fund should experience on average about 7% to 12% annual growth over a sufficiently long period of time assuming it is not mismanaged and assuming there are no economic disasters in the mean time. 7 years marginally qualifies as a sufficiently long period of time. Fixed income mutual funds should experience about a 5% to 7% annual growth over a sufficiently long period of time, but taxes will consume most of that so the net will be about 3% to 5% which in turn will be consumed by inflation.

Even for equity based mutual funds taxes consume a significant portion of ones return, but less than with fixed income mutual funds.

Assuming 7% for 7 years, $48,173 will be the before tax amount at the end of 7 years.
Assuming 12% for 7 years, $66,320

However, past performance is no guarantee of future performance. It is entirely conceivable that you might actually wind up with less as those who invested in technology growth funds in 2000 can attest to. 7 years laters most are still under water. Some a whole lot under water.

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ManagingMoney.com discusses the launch of the new Charles Schwab Managed Mutual Fund product.

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On September 30, 2008, the Seidman College of Business hosted an emergency summit at Grand Valley State University to explore the intricacies of the global financial crisis in the United States and in West Michigan. “Historic Financial Crisis: A West Michigan Conversation,” included panel presentations from and discussion between six academics and practitioners.

Mitch Stapley is responsible for all fixed income management trading at Fifth Third et Management, Inc. Mr. Stapley has been with Fifth Third since December 1988. Fifth Third et Management manages ets in excess of $21.3 billion, including Fifth Third Funds, a no-load mutual fund family with over $12 billion in ets. Mr. Stapley is the portfolio manager for the Fifth Third Bond Fund, which was rated one of the top ten A-rated bond funds according to Lipper Analytical Services, Inc., for the years ending on December 31, 1998 and 2000. Prior to joining Fifth Third, Mr. Stapley was Manager of Short Term Investments/Foreign Exchange Exposure at Navistar International Corporation in Chicago. At Navistar he was responsible for both investment strategy and implementation and foreign exchange hedging and trading. Prior to joining Navistar, Mr. Stapley served as portfolio manager for William Wrigley Jr. Company in Chicago. Mr. Stapley received his BA degree in economics and political science, with honors, from Albion College in 1981. He was awarded the Chartered Financial Analyst (CFA) designation in 1994 from the ociation for Investment Management and Research. Mr. Stapley is a frequent speaker before client groups and civic organizations. He has appeared as a guest on NBC, CNBC, and Bloomberg News, and has been featured in Forbes, Barrons’, the Chicago Tribune, The Washington Post, the Wall Street Journal, and many other publications. Mr. Stapley is a member of the Detroit Bond Club and served as president for the Investment Analysts’ Society of Chicago-Western Michigan Chapter.

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I like no load mutual funds at any point. Especially if you are a long term investor. All my money is in no load funds at: Vanguard, Fidelity and/or TRowe Price. Any one of these families have a nice mix of index and managed funds. You couldn’t go wrong, if you picked any of the 3 I mentioned.

Do your asset allocation plan first. After that, you can find the funds available to you at the family you have picked.

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I have been reading all I can about investing in mutual funds, but I can't find out how to determine profit or loss on a short term trade (say, 6 or 7 months). I understand the following about how funds earn money if held over a year:
·The fund earns income on its investments, and distributes it to you in the form of dividends.
·The fund produces capital gains by selling securities at a profit, and distributes those gains to you.
·You sell your shares of the fund at a higher price than you paid for them.

So then, if a fund is held short term, do I still get a proportion of the dividend and distribution? Or is a short term gain (or loss) only determined by share price?

Thanks for helping or other referrals.
Happy Holidays to all!!!
tc

It depends on when you buy and sell the mutual fund. Nearly all, if not all mutual funds go ex-dividend about the middle to the end of December. They have nearly gone gone ex-dividend in the past 2 weeks. If you had purchased the mutual fund prior to the ex-dividend date and held the mutual fund through the ex-dividend date, you would have received the dividend. If on the other hand you had purchased and sold the mutual fund before the ex-dividend date, you would not have received the dividend.

Now you need to also know this. When the mutual fund goes ex dividend, the price of the mutual fund drops by the amount of the dividend. So with one exception it does not matter one way or the other short term whether get the dividend or not. The exception is that the dividend is treated for tax purposes as long term capitial gains in most cases or as dividend income which is treated at a very favorable tax rate. Short term capital gains is taxed at the normal tax rate. You also need to know that many mutual funds, if not all charge a redemption fee for shares not held a certain period of time. For some it is 90 days. I do not believe that funds with front end loads have a redemption fee in general because they stuck it to you when you purchased the fund. To avoid redemption fees and front end loads, trade only index funds or closed end funds that are ETFs.

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