You have heard about a particular mutual fund from a friend, saw it advertised on TV or read about it in some publication thought it would be a good buy. Next you call your broker to get his advice before you buy because he is an expert and is there to help you make money.

Hello, Billy Sol (see Billy Sol Estes on Google), this is Joe Mushroom and I want to buy some XYZ mutual fund. What do you think?

Joe, I was just thinking about you and was going to call you, but first let me look up XYZ for you. Uh oh! Joe it has a high expense ratio of about 1 per cent. I would not recommend that for you.

Billy Sol fails to mention that XYZ has no load (thats commission) so he would not make any money if you bought it. There are thousands of excellent no-load funds that outperform the load funds. Billy Sol says the fund his brokerage company recommends is ABC and again fails to mention it has a 5% load (commission) and goes on to paint a beautiful picture of ABC and how well it has done in the past 5 and 10 year period. Furthermore the expense ratio is only one per cent which is savings of 33%.

WOW! Joe thinks that sounds pretty good so he lets Bill Sol buy ABC instead of XYZ. Lets see what really happened.

Joe saves percent per year on the expense ratio, but pays and extra 5% up front. Maybe Im wrong, but if you divide % in 5% that goes 10 time. In other words it is going to take Joe Mushroom 10 years to makeup that 5% commission charge not counting what that 5% charge would have made if it had been working in Joes account for that 10 year period.

What it boils down to is never pay commission for any mutual fund. If the broker will not sell you a no-load fund then get another broker. He is not trying to help you make money. He is trying to make money for himself and his company and may tell you his company does not carry a particular fund because they dont think it is a good. Hog wash. Another broker lie. It is your money and you are entitled to buy any fund. Go to a discount broker who handles that fund and open an account. It will save you a bundle over the years and they are as safe an any big-name broker.

Advice from a financial planner is no better if he is making commissions. The smart method is to have a fee based broker who has a winning track record. Have any financial planner show you his model account. He should have one or maybe several model portfolios. Unless they make money every year he is not a successful money advisor. Dont let them hoodwink you about their performance is better than the S&P500. Thats nonsense. You want to see a cash increase every year.

The first and basic rule is never pay commissions for any mutual fund.

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.