How to Buy Mutual Funds

Welcome to

Please help us personalize your experience and select the one that best describes you.

Your personalized experience is almost ready.

Join other Individual Investors receiving FREE personalized market updates and research. Join other Institutional Investors receiving FREE personalized market updates and research. Join other Financial Advisors receiving FREE personalized market updates and research.

Thank you!

Check your email and confirm your subscription to complete your personalized experience.

Thank you for your submission

We hope you enjoy your experience


Find the latest content and information here about the 2019 Charles Schwab Impact Conference.


Receive email updates about fund flows, news, upcoming CE accredited webcasts from industry thought leaders and more.

Content focused on helping financial advisors build successful client relationships and grow their business.

Content geared towards helping financial advisors build better client portfolios.

Get insights on the industry trends and investment news from leading fund managers and experts.

mutual funds picture

Mutual Fund Education

How to Buy Mutual Funds

Sam Bourgi Nov 06, 2018

’How to buy mutual funds’ is a topic that comes up frequently among new investors. Luckily, the growth and widespread adoption of online trading platforms has made mutual funds easier to access than ever before.
In general, there are three main ways that investors buy mutual funds. This article provides a breakdown of each as well as the factors that might lead you to prioritize one method over another.

Click here to learn more about how to research mutual funds.

Accessing Mutual Funds

Market participants can access mutual funds through one of the following three methods:
  • Purchasing through a broker
  • Directly from a mutual fund provider
  • Investing in a retirement plan like a 401(k)

Purchasing Through a Broker

One of the most common ways to buy mutual funds is through a broker or online trading platform. Like stocks, mutual funds trade with an assigned ticker symbol, which allows you to search and analyze the asset before purchasing. This can be done online through a broker’s website or trading platform as well as in person at a branch.

Brokers typically charge commissions and other fees for using their service. These fees are not unique to mutual funds but apply to the entire range of assets you access through that service provider. Typically, mutual funds are structured as an exchange-traded product, with fees and commissions similar to what you’d pay for accessing stocks.

Mutual funds that come with a sales charge or commission are referred to as load funds. Annual commissions on load funds can run as high as 5.75%, although this varies greatly based on the broker. Although load funds can be considered expensive, they are usually offset by a mutual fund’s competitive expense ratio. From a cost perspective, this leaves you better off in the long term, especially if you adopt a buy-and-hold approach.

Directly From a Mutual Fund Provider

Investors also have the option of purchasing a mutual fund directly from the provider. This is especially pertinent if you want to invest your money in a specific mutual fund or family of funds offered by a single company. Registration and payment are typically done online. This gives you the option of opening up a regular account or retirement account directly with the mutual fund provider.

Direct investing is beneficial because it allows you to set up automatic, recurring contributions. This is ideal for investors who are committed to dollar-cost averaging over a long-term horizon. However, the biggest benefit of direct investing is bypassing broker fees and commissions. This means more money is allocated to buying shares as opposed to paying the broker.

Check here to learn more about share classes.

Investing in a Retirement Plan Like a 401(k)

In today’s business world, companies regularly offer their employees retirement benefits that can greatly accelerate savings. One of the most common is the 401(k). Through a 401(k) or any other retirement plan, the company will allow you to invest in mutual funds directly through the plan. Many companies also match their employee’s monthly contributions up to 6% of their annual salary. This means you can contribute a set percentage each year to a mutual fund and have your employer match that contribution.

Although this is a great way to boost your portfolio, one of the biggest downsides is a lack of investment options. Unlike brokerage accounts, the range of mutual funds offered by your employer through a 401(k) or similar retirement plan is likely to be much smaller. That being said, the employer match is a popular option for investors looking to make steady and sizable contributions to their favorite funds.

Be sure to check our News section to keep track of the recent fund performances.

The Bottom Line

A competitive broker environment and attractive employer retirement plans have made mutual funds more accessible than ever before. You now know the three most common methods for purchasing mutual funds for long-term growth.

Sign up for our free newsletter to get the latest news on mutual funds.

Sign up for Advisor Access

Receive email updates about best performers, news, CE accredited webcasts and more.

Popular Articles

Download Our Free Report

Why 30 trillion is invested in mutual funds book