November 30, 2012

Biggest Commission

If you've been reading this blog or my book, you know that I was a stockbroker or what is currently referred to as a financial advisor or wealth adviser or financial planner, etc.  You probably also know that I believe that you can invest by yourself for yourself and save a fortune over a lifetime.

If you still insist on using a financial guy to make your investment decisions, let me tell you about some of my biggest commissions.

There was a time, not very long ago that I and everyone else was paid 8.5% for selling you a mutual fund.  That's $8500 of your hard earned money on every 100k that I placed!  And get this, that fund was front-end loaded meaning that the 8.5% came out of your investment right away just to pay me and my firm.  Believe it or not, there are still some very popular funds and stockbrokers getting paid this way and its still as high as 5.5%!  

Times have changed and people have wised up however so did the brokerage and mutual fund industries.  They migrated to B shares or back-end loaded funds which still paid me and my firm right away but you didn't see any commission unless you tried to sell within the next five or so years then of course, you were hit with the commission then.

These days, there is no reason whatsoever to buy into a mutual fund and pay a fee or a load.  Please check at yahoo finance which is a great unbiased website.  Just put the fund symbol where it says 'get quote'.  Then click on 'fund profile' and scroll down and you will see 'fees and expenses'.  They will compare whatever you are looking at to the average in that category.  Here is an example and you will have to scroll down to see the chart.

As always, I am available for coaching to answer any questions you may have.