To back load is to make an arrangement or scheme in which either costs or benefits are placed towards the end of its run. It is the opposite of front loading, which involves the placement of these factors early in the run of the agreement.
A back-end load is a charge that investors have to pay when they withdraw part of the funds from an investment, usually either a mutual fund or annuity. Since this charge is paid later in the investment process, it may also be considered a deferred sales charge. This is not always the used, as there are some investment types which require charges early in the investment process.
In order to determine how much the back-end load in a particular case will be, it is important to take note of how much will be withdrawn from the investment. The length of time since the investment was put up is another important consideration, because investments that have been in place for a short period of time are more likely to bring with them higher back-end costs. This may encourage investors to avoid touching the funds invested, which may be more beneficial for the investor in the future.
For individuals who decide to invest for the purpose of setting up personal retirement funds or savings for major expenses in the future, entering into agreements that involve back-end loading may be quite advantageous. Fees are only paid when withdrawals are made, and the process is simple and reasonable enough for small investors to appreciate.