This list is for purely educational purposes. 

And I’ve narrowed it down to “Nevers” that are universally accepted. 

You might find that you (or your advisor) have violated some of these.

If that’s the case, then I hope this serves as a guideline.

  1. Never buy a mutual fund that charges a sales fee to purchase it.  For example, some advisors like you to buy funds that cost up to a 6% sales charge just to get in.   That isn’t fair to the investor.  As an aggregate, funds charging purchase fees underperform funds that don’t charge purchase fees.  Can you think of why a salesperson might want a percentage of what you deposit?
  2. Never buy a mutual fund that costs you money to withdraw it.  In some cases, funds charge “back-end loads” ensuring that the salesperson/advisor is compensated a percentage of your assets if you sell the fund before a 5 year (or 7 year) period.  You don’t have to buy these funds.  Don’t let anyone convince you otherwise.  As an aggregate, they underperform funds that charge nothing to withdraw.
  3. Never sign a contract with a company ensuring that you will have to continue depositing a set amount of money each month/year.  Most of my readers will ask, “What company does that?” Let me just say that there’s one in Singapore, named after a Swiss city, where its representatives fleece unwary investors.  The same company also charges prohibitive sums if an investor needs their money for an emergency before their “contract term” is up.  These contract terms can last 20 years.  These businesses are not fair.  Watch out for them. 
  4. Never allow anyone to charge you a wrap fee or advisor’s fee to stuff actively managed mutual funds into your account.  I have seen some Raymond James representatives do this.  Don’t let them.  If you pay an annual fee of 1.75%, added with the hidden fees of actively managed funds (roughly 1.5%+) then you could lose money (when accounting for 3% inflation) even if the stock market marches ahead by 6% per year.

Can anyone else think of some “Nevers” for new investors?