There was a piece in the Wall Street Journal over the weekend on how B class shares in load funds seem to be nearing extinction. That may sound like a classic bottom story, the disappearance of something already obscure, but it’s 
a good excuse to discuss the economics of load funds.
Open-end mutual funds basically come in two types: load and no-load. A load is a sales charge, a commission paid to the guy who sells the fund and his employer. (And no, I have no idea why it’s called that. Much gratitude to anybody with an etymology.)
There is a widespread feeling that loads are fundamentally a rip-off. Why pay a load when you can get a no-load fund for free? That’s not an entirely illogical argument, but it misses the point. The load funds are sold by financial advisors who need to be compensated for their time somehow. A particular broker may not be worth the money, but that’s an entirely different issue, not a problem with load funds in principle.
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It’s time for me to bring the series I’ve been doing on a a toy at CNNMoney to a close. Previous installments have covered housing payments, emergency funds, asset allocation, buying your employer’s stock, and life 
insurance. This final installment is on the topic of the last question in the CNNMoney "How Healthy Are Your Finances" quiz, retirement savings.
Like all the other questions, this one has you type in a number or two and gives you a red "Danger" or a blue "Congratulations" for your trouble. The question asks for monthly savings and how much you have already saved. I found that, having previously said I was a 40 year-old making $50K a year, with $10K already saved, if I put in $750 of monthly saving I get the pat on the back but at $700 I fail.
Given the number of variables, I don’t have the patience to back out what rule the toy is using to divide the ants from the grasshoppers. And it doesn’t provide that rule in the explanation of how you did, leaving a user only trial and error to find out what good is. That leaves something to be desired in the way of actionable advice.
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There is a pretty obvious reason why buying lottery tickets is a bad idea. You will lose money. The odds are usually just awful. Casino gambling is, in comparison, a comparatively sound investment.
And, of course, casino gambling is not a wise thing to do with your savings. You would have to be off the deep end of "positive thinking" to believe anything other than it was, for some, an amusing way to waste money.
That objection to gambling, and lotteries, is today so pervasive that we have all but forgotten another traditional objection. A hundred years ago, at least as common as the argument that you would probably lose was the one that you might win. Back in the almost forgotten era when gambling of all kinds was illegal throughout the country, it was argued that gambling undermined the work ethic, allowing some to become rich without appropriate effort. And that was immoral.
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Yesterday the New York Times ran an editorial so inflammatory and in such willful disregard of the facts and reason that I can do nothing other than spend today’s post calling the editors of that once proud newspaper out as the bitter and infantile hate mongers that they are.
The editorial, entitled “Goldman’s Non-Apology” starts with dismissive criticism of a mild and philosophical mea culpa, largely on behalf of the entire financial industry, made last week by the CEO of Goldman Sachs, Lloyd Blankfein.
Certainly, our industry is responsible for things. We’re a leader in our industry, and we participated in things that were clearly wrong and we have reasons to regret and apologize for.
This, the Times tells us, is a non-apology that falls far short of what is due. “Even if he had said, “we’re sorry,” it would have been hollow since he never actually said what he was sorry for….” Of course, the Times doesn’t get into all that much detail about what he should be sorry for either.
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This is the fifth in a series inspired by a toy at CNNMoney. Previous installments covered housing payments, emergency funds, asset allocation, and buying your employer’s stock.
Using the search box just to the right here, I have discovered that in 217 posts to this blog I have used the phrase "life insurance" exactly twice. Once in an early Frugal Friday, and once in a post about annuities. Both mentions were in passing.
That may strike you as odd. In fact, it surprises me. Life insurance is a part of personal finance and certainly a likely topic for bad advice. And yet it doesn’t actually come up all that often in the media, traditional or otherwise.
It’s in the CNNMoney tool.
You need enough life insurance to replace at least five years of your salary – as much as 10 years if you have several young children or significant debts. But you might not need it at all if you have no dependents.
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a good excuse to discuss the economics of load funds.
Investing, Media | Frank Curmudgeon | 
December 2, 2009 12:59 pm | 
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