There are basically two main types of mutual funds: no load mutual funds and load mutual funds. While a load fund charges fees such as set up fees or commission fees, a no load mutual fund does not charge any fees.

You’re probably assuming that a no load mutual fund is better because you don’t pay any fees. It’s easy to assume this, but you should first completely understand how it all works before you make that assumption.

Mutual funds are a huge time saver and they allow you to invest in stocks even if you aren’t a professional stock broker. You get a very well diversified portfolio from a professional mutual funds manager. You need to diversify if you want to reduce the risk of your portfolio.

As with any kind of investment, you want to get the highest return possible. In order to do this, you need to maximize your direct return and minimize your expenses. Choosing no load funds will eliminate virtually all your expenses.

Load funds claim they can get you an above average return. They can’t guarantee that. The stock market is unpredictable and you could likely get the same return with a load fund as you can a no load fund.

Sometimes, maybe even most of the time, the load fund can get you a higher return, but after you subtract the fee, it might be the same or less than the no load fund that doesn’t charge fees.

When it comes time to choose between a load or no load fund, you’d probably be better off with a no load fund. You save money on fees and you can still shoot for a higher return by choosing a riskier and less conservative fund. You get a higher chance for a higher return without the fees.