break points in essence are volume discounts. as aretail investor buying lets’s say 10k in a mutual fund you may pay .65 of 1% in a management fee. at 50 k the same identical fund might only run you .35 of one percent.
this holds true for load funds aswell. let’ look at the american funds. typically they carge 5.75% load on a shares of their funds. put a million bucks with them and they waive the load. there are disconts on your way to a million aswell.
why is this important. because if you begin to aggregate your invetments you can get to a million fairly quickly. 2 kids that you will pay for college 200k. a rollover ira from a company 150k. Some rebalancing in the IRA 100K. wifes rollover 150K. Now if you own real estate for a eriod of time and feel that there is a lot of dead equity in the home you can elect to pull this out and put it to work 300k.
All of audden you have the best money management team in the world managing a million dollars of your wealth for an annual cost of between 5 to 8 k a year. i would say that isn’t too bad a deal.
pay attention to the break points early. you want to stay with the a great family of funds. this gets more challenging to do later on because later you have to deal with tax consequences if you are trying to sell to reach these break points.
