Hidden Costs on ‘No-Load’ Funds

QUESTION: I have recently started shopping around for a mutual fund and am finding that many charge not only up-front fees, but annual management fees as well. Are there other hidden costs I should ask about when I shop?--A. N.

ANSWER: Be especially wary of mutual funds that advertise no up-front fees. Without fanfare, some of these “no-load” funds now charge what is being called “back-end load.” These are exit fees, applied when an investor drops out of the fund earlier than he had promised when he signed up. They can range from 1% to 6% of the invested funds.

Up-front fees can vary widely, too. Expect to pay as much as 8.5% in sales fees to load funds. Even those that bill themselves as “low-load” funds sometimes charge sales fees of 3% to 4% of what you invest.

On top of that, most mutual funds will apply management fees for managing the account. The usual charge is between 0.5% and 2% of the balance.

Q: A friend and I were discussing moving costs the other night, and a question arose about how much companies usually pay to move an employee. Do you know?--W. I.

A: The cost depends on the distance and the amount of goods being moved, of course. But if the employee owns a home, the average relocation cost is about $30,000, according to the management consulting firm Runzheimer International. If the company buys the employee’s former house as part of the relocation expense, Runzheimer reports, the average cost climbs to $34,692.

In contrast, Runzheimer has found that the average cost of moving a renter is just $9,000. Why the huge difference? Homeowners, as a rule, bill the company for much higher temporary living expenses than renters do, and they usually are reimbursed by the employer for the costs of buying and selling a home.

By polling 566 companies on their relocation policies, Runzheimer also found that the cost of relocating home-owning employees last year ranged from $2,500 to $85,000. The range for renters was $175 to $46,000.

Q: My daughter will go to an out-of-state college next year. Her father and I wonder if you have any idea how much more parents are likely to have to pay for tuition next year than they did this year.--D. A. R.

A: The nonprofit Research Institute of America estimates that college tuition costs are likely to run 6% to 9% higher for the 1987-88 academic year than for the current year. Since out-of-state and private college tuition this year is running between $10,000 and $15,000 on average, don’t be surprised to pay as much as $16,300 for tuition next year.