 Personal finance practice problem using OneNote. Mutual fund commission load front end load. Prepare to get financially fit by practicing personal finance. You're not required to, but if you have access to OneNote, would like to follow along. We're in the icon left-hand side practice problems tab and the 1320 mutual fund commission load front and load tab. Also take a look at the immersive reader tool, practice problems typically in the text area too with the same name, same number, but with transcripts, transcripts that can be translated into multiple languages that either listened to or read in them. We're considering mutual funds, remembering that as individual investors, we could invest in individual stocks and bonds, but most likely we're gonna be utilizing tools like mutual funds and ETFs, allowing us to pool our money together in a fund with other investors. The fund manager then investing those funds in a broader array of securities in accordance with the rules of the fund, possibly allowing us more diversification as individual investors than we can get otherwise. Also remember when you're talking about something like a 401K plan or an IRA, you don't typically wanna think of them as completely separate than other investment tools such as mutual funds because usually you have a mutual fund that is under the umbrella of an IRA or a 401K plan or something like that, which gives you tax benefits that you have to consider, but it also restricts your access to the funds that's kind of the trade off. So when you're putting money into the mutual fund and buying mutual funds, you can apply similar kind of rules oftentimes to when you're buying other securities such as stocks, but you wanna make sure you're wrapping your mind around the fact that you're applying these concepts to the purchase of a fund, the fund then holding on to other securities within the fund. So when we're managing the fund or you're thinking about a mutual fund, there are different kinds of fees that are gonna be involved with the fund. Obviously the fund has to basically take care of just the managing of the fund. Those fees could vary depending on how much leeway you are giving to the fund manager to be able to pick and choose different securities within the fund. So the more leeway you're given to the manager, the more you need a professional fund manager, the more they're gonna basically charge as a fee to the fund most likely, or you might be on the other side of things and say, look, I don't want the fund manager to have a lot of leeway. I just want to have an indexed fund, tying the fund to say an index, the averaging tools that we use in some way that really limits the fund manager's capacity to pick and choose. And you really just need a fund manager to kind of try to tie out the investments in the fund to the index, which still means you're gonna have fees, but they might be a lesser. We also could have fees on the front end, and we could have the fees basically on the back end when you buy them or when you sell them. So you wanna keep these kinds of concepts in mind when investing in the mutual fund. Okay, so we're gonna say that we have an investment that we're gonna invest in $60,000. We're concentrating here on the commission load when purchase front end load. So this is the type of charge that you could get when you're purchasing the fund, which you could see here is basically a commission. Now, you may be able to avoid that kind of charge depending on who you're buying the fund from. So you wanna keep in mind whether or not you have a commission load. Basically, you're paying kind of like a broker for the purchase of the fund, or could you go directly to the source of the fund for example, and possibly not be paying the commission load. Once again, this is one of the three kind of possible charges we can think of as a fund, right? You got the front end load when you purchase the fund, which is kind of like a commission that you wanna consider if you can avoid that commission if at all possible. You've got the management of the fund, which is generally gonna be going on going as you own the fund. You would think as you're paying for the management of the different assets within the fund, which will be dependent upon how much control you have given to the manager of the fund, and then you could have the back end fees when you sell the fund, which possibly could be applicable if, for example, they want you to hold on to the fund for some timeframe. So you can imagine a situation where if you buy and sell the fund very quickly, that's something that they don't want to happen, so they might charge you when you sell the fund. So if we then just calculate if there is a commission and we put $60,000, the calculation would, of course, be straightforward. If they charge us to 6.2%, then what we would be paying the one-time charge that we would have would be the 3,270, which is simply the 60,000 times 0.062. And so we're thinking that's the one-time charge that we wanna consider. Are we paying that? That might have our effect, our decision-making process. Is there any way that we can avoid that kind of charge and then consider if there are any other kind of fees that are involved, including the fund maintenance kind of charges, comparing that to other similar types of investments. And if there's any back-end charges for us when we sell the fund that might have a kind of timeframe restriction on it, we'll talk more about those in future presentations.