Before mutual funds became the de facto standard investment option in 401(k) plans, before 401(k) plans became the de facto standard retirement savings option, most people invested in individual securities. Sure, mutual funds existed back then, but they often carried large commission charges, even larger front-end loads, and, to discourage you from leaving, mutual fund companies imposed large back-end fees.
Simply stated, mutual funds cost too much for the average investor. And by “cost,” the reference isn’t to the fund’s underlying expense ratio, but to the actual out-of-pocket costs you’d have to pay for the privilege of pooling your investment money with others.
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