Some people will surf the Internet for hours to save $25 on a DVD player. But many investors bizarrely throw away hundreds if not thousands of dollars every year when investing in mutual funds.

Figuring out what you're paying to invest might seem intimidating, but it's really not that complicated. First, you start with the fees you'll pay to buy a fund in the first place and then work your way down.

Here's a quick list of ways to trim the fat:

Going It Alone

If you buy a mutual fund from a broker, you're going to pay more for the privilege. It's just that simple. But it's how much more that'll shock you.

An upfront sales charge of 5.75% might not


like a lot. But if you're investing say $40,000, you're paying $2,300 for that one purchase. Yes, there are other types of loads that come on broker-sold funds -- back-end loads that hit you when you sell or level loads that keep on taking.

The point being: To cut costs dramatically, you can go it alone and save yourself a lot of money.

But if you have to use a broker, you must understand exactly what you're being charged for that advice and inspect those numbers yourself. When someone is trying to sell you a fund, you'll want to see more than a two-page document -- a so-called "tear sheet" -- which vaguely explains what the portfolio invests in.

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You should always ask to see a prospectus (you're supposed to get one when you buy a fund, but that's another matter).

Yes, a fund's prospectus can be filled with mind-numbing legalese. But it also lays out exactly how the sales charges and fees work. To put the costs of a fund in real-world dollars, go right to the fee table. Every prospectus has to include the costs of owning a fund over several time periods, based on a hypothetical $10,000 investment and a 5% annual return.

If you're trying to compare one fund to another, this is the place you want to come. Just look at the

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Putnam New Opportunities fund, which comes with a sales charge, up against the no-load

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Marsico Focus fund. Over five years, the Putnam fund -- assuming you bought the A shares -- would cost you $1,086. The Marsico fund? Only $713.

That savings is a brand-new TV.

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.


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.

Everything Else

Then there are all the other ancillary fees to be on the lookout for, such as extra charges for low account balances. They can add up.

Say you love the low costs of Vanguard's index funds but are buying one through Charles Schwab's fund supermarket.

You'll pay a minimum transaction fee of $35 to buy some no-load funds like Vanguard's. That amount doesn't sound like a lot. But 35 bucks would be 1.2% of a $3,000 investment in the

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Vanguard 500 Index fund.

And that figure is six times higher than that Vanguard fund's annual expense ratio.

You're essentially defeating the purpose of buying a cheap index fund by paying a brokerage fee to buy it. If you really want to cut your costs, head straight for Vanguard.

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