Purchasing mutual funds

When you have decided on the mutual fund or funds you want to add to your portfolio, you're ready to authorize the transaction. The registered representative you work with to make investment selections at your brokerage firm or bank can handle the purchase for you. You should expect to pay a sales commission unless you have a fee-based account, which means you pay an annual asset-based fee that covers transaction expenses.

In some cases, investment companies sell the funds they sponsor directly to investors without using an intermediary. The sales representatives you speak to on the phone can provide information but not specific advice or recommendations. That means you'll have to be confident in your own financial judgment, and able to make investment decisions independently. Typically, direct distributors don't charge you a sales commission.

If you invest in mutual funds through a retirement savings plan at work, such as a 401(k), you may or may not have access to investment advice through the plan sponsor — typically your employer. The funds offered through the plan should provide enough choice to allow you to allocate your principal across the major asset classes. In some cases, there may be a dozen or more funds to select among. The guidelines that apply to choosing a fund for a regular taxable account apply to tax-deferred accounts as well.

Marc Lackritz

BACK