Now we discuss a very important aspect of mutual funds. This is called the entry load. This is very vital, simply because this has got direct impact on the amount of money you spend when you're purchasing mutual funds. Let's have a look at what it is all about. Entry load is charged when the investor is purchasing units in the mutual fund. At the time of purchase of units the entry load is charged if at all it is applicable.

There are mutual funds where there is no entry load as well. When a mutual fund is launched, the entry load is very clearly mentioned in the scheme document. This needs to be studied very carefully while purchasing mutual fund. Entry load is generally between zero percent to 3%. In most cases it is 1% or zero percent. However, the investor should very carefully check what is the entry load before purchasing the mutual point zero percent entry load means no load.

Let's further understand entry load through a calculation. Let us first look at the case, when there is no entry load take the following situation, the investor wants to invest rupees 5000 to buy a mutual fund, the cost of one unit of mutual fund is rupees 10 and there is no entry load as is our case right now, then the number of units that will be allocated to the investor will be 5000 by 10 is equal to 500 units. Next, we look at a case when there is entry load. So, suppose the investor wants to invest rupees 5000 the cost of one unit is rupees 10 and the entry load is 1% then the entry load is 1% of rupees 5000 which is rupees. So, the amount Remaining is rupees 5000 minus rupees 50 which is rupees 4950. So, the number of units to be allocated is rupees 4050 divided by rupees 10 per unit, which is equal to 495 units