Finance: What is a Back End Load?

What is a Back End Load? A back end load is a sales fee that is paid on a mutual fund after it’s sold (on the back end). Sometimes it’s a set amount and other times it’s an amount that continually decreases, so if the fund is held long enough, the fee drops away.

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Transcript

00:25

called a B-share and yes we have an opus video on the term you should check

00:30

it out so why would you choose a back-end load over a front-end load well

00:35

if you pay your commission on a thousand dollars invested to you know start out

00:40

on your mutual fund investing sojourn well you start your compounding there

00:44

within a safe 970 dollars after having paid the three

00:48

percent commission there you compound away on a lower starting nut than you [Front end load calculations]

00:53

would have had you paid your commission at the end the problem well say you held

00:58

the fund 15 years you started with a grand ie not nine seventy because

01:03

there was no commission when you became an owner of the shares of the fun you're

01:07

gonna do the B shares take the back end load and after 15 years that grant

01:11

doubled three times to become two then four then eight grand in value now you

01:15

pay a commission is it three percent still well in some funds it might be so

01:20

then you're paying three percent on eight grand or a total commission of two

01:23

hundred forty dollars instead of the thirty bucks you could have paid upfront

01:28

have you just bitten the bullet in the beginning and bought a shares [A and B share commission value]

01:31

well tons of gimmicks crawl around out there when you're buying mutual funds [Ants crawling through cracks on the floor]

01:35

hoping to get you to pay up for the brokers right? brokers got to live but

01:39

well you just got to understand what you're being sold and some of those

01:42

brokers well they have babies at home and you know they need to pamper them [man holding a diaper]

01:47

with back-end loads