Investing in Bonds For Dummies
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An astonishing number of bond funds charge loads. A load is nothing more than a sales commission, sometimes paid when buying the fund (that's called a front-end load) and sometimes paid when selling (that's called a back-end or deferred load).

NEVER PAY A LOAD. There is absolutely no reason you should ever pay a load of (not unheard of) 5.5 percent to buy a bond fund. The math simply doesn't work in your favor.

If you pay a 5.5 percent load to buy into a fund with $10,000, you lose $550 up front. You start with an investment of only $9,450. Suppose that the fund manager is a veritable wizard and gets a 7 percent return over the next five years, whereas similar bond funds with similar yearly operating expenses are paying only 6 percent. Here's what you'll have in five years with the load fund, even though there's a wizard at the helm: $13,254. Here's what you'd have with the no-load fund, assuming the manager is merely average: $13,382.

Russell's rule: Buying a load bond fund is plain and simple dumb. Unless you get some kind of special deal that allows for the load to be waived, don't buy load funds. Repeat: Don't buy load funds.

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Russell Wild is a NAPFA certified financial advisor and principal of Global Portfolios, an investment advisory firm based in Allentown, PA that works with clients of both substantial and modest means. He has written two dozen books and numerous articles on financial matters.

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