If you’ve invested in mutual funds, you’ll likely eventually hear the term breakpoint, which is a dollar amount that you need to reach to qualify for reduced sales charges. It’s good for you but not great for brokers or investment firms as it means they earn less commission if you reach the breakpoint.

Example: Let’s say a mutual fund has a breakpoint of $25,000 with a standard sales charge (load) of 5%. When you reach the breakpoint, the sales charge drops to 4.5%. It benefits you to invest $25,000 instead of $22,000 in this case as you’ll save .5% on sales charges for the entire initial investment.

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