11 Best Brokers for Mutual Funds of September 2024 - NerdWallet (2024)
That depends on the type of mutual fund you choose. Actively managed mutual funds employ a professional to invest and manage the fund’s assets. That costs more than a passively managed fund, such an index fund, which skips the fund manager and instead selects its investments by copying a benchmark, such as the S&P 500. An S&P 500 index fund aims to mirror the performance of the benchmark index.
In either case, keeping wealth-eroding fees at bay requires guarding against both high brokerage account fees and the costs that come with mutual funds themselves. There are three common expenses associated with mutual funds:
1. Transaction fees: Charged on the purchase or sale of the fund — and in some cases, on both. Select a broker with a long list of no-transaction-fee mutual funds — like many of the ones we’ve recommended above — to avoid this cost.
2. Early redemption fees: Charged by a broker for selling out of a fund in the first 60 to 90 days. Aim to hold your mutual funds as a long-term investment.
3. Expense ratios: This charge comes from the fund itself. It’s an annual fee that is often higher on actively managed funds than passively managed funds. Expense ratios are expressed as a percentage of your investment: A fund with a 1% expense ratio will cost $10 a year for every $1,000 you invest. You can’t avoid expense ratios, but you can steer your money toward low-cost funds. Familiarizing yourself with the average mutual fund expense ratios will help you recognize if you’re paying too much.
Conventional wisdom holds that when you hit your 70s, you should adjust your investment portfolio so it leans heavily toward low-risk bonds and cash accounts and away from higher-risk stocks and mutual funds. That strategy still has merit, according to many financial advisors.
Conventional wisdom holds that when you hit your 70s, you should adjust your investment portfolio so it leans heavily toward low-risk bonds and cash accounts and away from higher-risk stocks and mutual funds. That strategy still has merit, according to many financial advisors.
Known for his no-nonsense approach, Ramsey emphasizes the importance of debt elimination and building an emergency fund before venturing into investments. He advocates for mutual funds with a long-term perspective and a diversified portfolio.
Fidelity is the investment house of choice for more than 51.5 million customers, while Charles Schwab has more than 35 million client banking and brokerage accounts. Both firms are enormous; Schwab boasts more than $9 trillion in client assets, while Fidelity has $14.1 trillion in assets under administration.
Fidelity is generally better for lower account balances (accounts less than $25,000) and direct crypto exposure.Charles Schwab is better for higher balances and offers a more comprehensive selection of advanced charting tools like the thinkorswim platform.
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