Mutual funds are a popular investment choice for retirees. They come with many options: the different types of share classes, which essentially reflect fee structures associated with the funds. Th💧ese fee structures are usually pretty straightforward, although it can be difficult knowing which share class is right for your situation.

For the most part, when you're working with a commission-compensated advisor, like a澳洲幸运5官方开奖结果体彩网: financial planner or a 澳洲幸运5官方开奖结果体彩网:stockbroker, you're going to buy one of two share classes: A or C. There a🔜re others, but for the sake of this article, we're going to focus on these most popular share classes.

Class A Shares

The class A share includes an up-front 澳洲幸运5官方开奖结果体彩网:commission, otherwise known as a 澳洲幸运5官方开奖结果体彩网:front-end load. Typically, if you're a 澳洲幸运5官方开奖结果体彩网:retiree who needs income immediately, this isn't the best share class to buy. Class A shares have a high initial investment that's required (as fees), so a large portion of the 澳洲幸运5官方开奖结果体彩网:principal you invest will take a hit when you purcha🐷se the shares.

However, if you have alternative income sources other than your retireme💟nt accounts, class A shares mig꧑ht be a wise choice.

Class C Shares

The class C share is, in many ways, the opposite of the class A share. The class C share typically lacks an up-front commission, but you have to hold it for at least one year. Otherwise, you're going to have to pay a 1% surrender charge.

Typically, as a retiree, this is the most attractive way to go so that you're not locked into the investment for an extended period. Additionally, you can also move to a different mutual fund company after that one year's time has expired.

There is a downside to class C shares, though. While you won't have the up-front commission, you will pay much higher internal fees, known as the expense ratio. This expense is typically at least 1% higher than you would pay with class A shares.

Which Share Class Is Right for You?

While there are many factors to consider when choosing a mutual fund share class, how long you can keep your money in investments will probably be the primary determining factor. If you can buy and hold your mutual funds for long periods, consider class A shares. If you can't, consider class C shares.

Alternatively, you may want to find an excellent fee-based money manager who can help you buy 澳洲幸运5官方开奖结果体彩网:institutional share classes. Institutional share classes will have much lower expenses than both the class A or C shares. But remember that you're also then going to have to pay the advisor their 澳洲幸运5官方开奖结果体彩网:management fee, which could be around 1% of your 澳洲幸运5官方开奖结果体彩网:assets under management per year. This can🍸 eat into your returns in a big🏅 way.

The Bottom Line

Take a few moments to consider the differences between the most popular A and C share classes and then decide which one is right for you. Choose wisely, and you're likely to save and make more money—which is exactly what you need during retirement.