Economist Milton Friedman once wrote that there is no such thing as a free lunch. Though Friedman's words are now considered a classic axiom of commerce, many of today's investors still believe they can get something for nothing--and they seek it from that bastion of capitalism, Wall Street.
In the past 10 years, the number of investors has soared, along with the level of the stock market and the number and type of mutual funds. Where once there were simple stock and bond funds, there are now dozens of funds investing in every conceivable type of security, using every kind of strategy. Some invest in certain sectors; others in different styles; still others specialize in particular countries. At last count, there were more funds than there are companies on the New York Stock Exchange.
As funds have proliferated, so have the ways to invest in them. Many investors are more, not less, confused than ever before. Let us make one thing perfectly clear: Whether a fund is no-load, carries a fee when purchased, has a fixed annual fee, or has a fee that decreases as the years pass, there is no such thing as a free mutual fund (although there may sometimes be a free lunch). All funds charge for the expertise of their managers and/or for the trading of their securities . . . and yes, Virginia, that means your no-load fund, too. That said, here are some ways to decipher the payment options available.