With Funds, What You Don't Know Can Cost You

The fund's prospectus also will show you how to save money if you're buying a broker-sold fund. The A shares on a load fund typically carry break points: The more you invest, the less you pay in sales charges. If you cough up more than, say, $50,000, the front-end sales charge should fall at least 1.25 percentage points. If you invest more than $1 million, there's no load at all.

You should know where these fee breaks kick in before you invest in a fund. Don't rely on a broker to explain it all in detail or catch a mistake if there is one.

The National Association of Securities Dealers, one securities regulator, recently discovered in an investigation that many brokerage firms haven't been giving fund investors the price breaks they were entitled to. Even if you're using a broker, you have to do some legwork yourself.

Pay Less Every Year

Every mutual fund investor can cut costs by simply buying funds with below-average annual expenses. Burn this number into your memory: 1.5%. That's about how much the average U.S. stock will cost you to own every year. Some types of funds, say sector or international funds, could cost you more. But Morningstar's Web site now includes the average expense ratio for a fund's category listed under each fund's expense ratio.

A fund's expenses are the one constant you can count on. You don't know if the manager will leave or if some of the stocks will blow up. But you can easily find out how much money won't wind up in your pocket every year.

And after three years of losses in the market and a new year that might deliver only single-digit gains, costs become even more important.