Mutual funds and fees



Part of my retirement money is in a Class C mutual fund. It was originally opened as a rollover IRA. When I opened the fund several years ago I didn’t know anything at all about investing. (Except that it was a good idea TO invest.) I still don’t know much about investing, but I’m learning.

One of the things that I’ve learned over the past year is a general idea of what “Class C” means. In short, I believe it means that there are no fees when you put the money into the fund, but there may be fees when you take it out. It just depends on how long the money has been in there. (Plus there are regular maintenance fees; apparently all types of funds have SOME type of fees.)

I didn’t think this would be a problem, since I wasn’t planning on taking the money out for many many years, and by then the back-end load wouldn’t have applied. But now I wonder, was this a bad idea? What if this fund does significantly worse than other funds, and I want to cut my losses and move my money to a different fund? Or what if I finally learn about “rebalancing” and that entails moving my money? Paying a fee to do that would just make things worse. Plus, I’ve read that Class C funds often have higher maintenance fees than other types of funds.

I should probably search and see if there are some advantages to Class C funds, but for now I’m chalking this up to a lesson learned. At least the fund itself was doing well until recently.

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Posted in Savings & investments on Jan 12, 2008

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