Save Yourself $2,250

Paying less is better than paying more. But paying nothing is the best of all.

I recently saw something that immediately went in my "Odd Advice" file. Money magazine offered a tip that if you invest fairly large amounts into certain mutual funds via a broker, you may be charged a lower sales load. (A load is a fee that some funds charge, typically when you buy into the fund.)

One example was the American Funds Amcap (AMCPX) fund, which sports a listed 5.75% load. Investing $50,000 in the fund can cut that to, uh, only 4.5%. Money pointed out that if you made a $50,000 investment, this lower load would save you $625.

To this I say: Why pay the load at all? If you invest $50,000 (and, come on, does the average reader really have that kind of money to park in a fund?), the 5.75% load will lop $2,875 off your investment from the get-go. If it's dropped to 4.5%, you'll only get a $2,250 haircut. Sure, you save $625 -- but you lose $2,250! That's a lot of money, and also an unnecessary loss.

I'd advise you instead, when you're tempted by a seemingly compelling load fund, to look around. You'll likely find some even more compelling and relatively similar no-load funds. Check out the alternate large-cap equity fund options below, for example.

Data: Morningstar.

Take fund fees and loads seriously. Just in the funds above, you can see a relatively wide range of expense ratios (annual fees). You can expect to pay 1% or so for stock funds, but index funds can be much lower.

Don't discount the power of mutual funds. Good ones can serve you very, very well. Just don't pay any more than you have to for them.

There are plenty of bad funds out there. Read as Amanda Kish warns you about investments that are sure to lose you money.