The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Richard Schmitt

NEW YORK ( TheStreet) -- Penny pinching gets a bad rap. Sometimes you may feel that salesmen get offended by customers who ask questions about a product's pricing. Sure they deserve to be paid a fair price. But then what is fair when it comes to the price you pay for gas, or for that matter of investing your retirement savings?

Unlike the relatively simple price structure of gas, investment funds offered in retirement savings accounts are priced a little differently and less transparently. When you consider the cumulative effect of investment costs charged your retirement savings portfolio on your future standard of living in retirement, you need to make it your responsibility to find out what's a fair price for investing. To understand the costs skimmed off the top as a percentage of your holdings in your retirement savings account's alternative fund options, be sure to heed this Safe Driving Tip No. 3:
Watch What You Pay at the Pump

Comparison shopping comes pretty easy when selecting among purveyors and grades of gasoline to keep your car running. Since you know you are getting a pretty consistent product across the board, you can just check signs along the road to pick a station for fueling up. By contrast, investment marketing may make investing feel a little like you're driving in the fog, relying on your instrument panel and a little hope.

Coming April 1, 2012, new disclosure requirements require more transparency in communicating fees assessed against retirement savings accounts. Additionally, these regulations promise participants more access to investment-related information to assist in their fund selection.

Armed with more information, you can plow through fund prospectuses and other plan-related materials to find the most suitable investment options and their underlying fees. Once you figure out the amount of fund fees charged your accounts, then you still must heed the ubiquitous warning that "Past performance may not be an indication of future results."

Just as a high-performance vehicle requires a more expensive, higher-octane gasoline, actively managed funds promising (but not necessarily delivering) higher returns command a premium price. Some actively managed stock funds with their hand-picked stocks charge an extra 2% or more of invested assets each year than passively managed market index funds invested in a defined broad market basket of stocks.

Unless justified by superior performance, that extra $2,000 per year taken out of a $100,000 investment in an actively managed fund can be a quite a drag on a retirement portfolio's investment returns over time. Taking into account the differences in cost and potential investment performance for actively managed versus passively managed funds, many investors with little time, interest, or inclination to research funds options resort to maintaining their exposure to the stock market through investment in less expensive market index funds based on a broad market index like the Standard & Poor's 500 index.

Inasmuch as cost represents just one criterion for selecting a fund worthy of your investment, you should also consider other factors such as the fund manager's background and experience, as well as the fund's investment philosophy, current holdings, track record, and outlook.

Once you have saved for retirement, diversified your retirement savings portfolio, and selected cost-effective fund options, you are ready to better your retirement destiny through a form of hyperactive portfolio rebalancing. Watch for an upcoming Safe Driving Tip No. 4 describing how you can 401(k) day trade your retirement portfolio in only a few minutes a day to extract lasting returns out of a volatile market apparently headed nowhere.

This article was written by Richard Schmitt, author of "401(k) Day Trading: The Art of Cashing in on a Shaky Market in Minutes a Day." Outside of his appearances on Fox Business News, KCBS, and Business News Talk Radio, he is an Adjunct Professor teaching retirement planning at the Edward S. Ageno School of Business at Golden Gate University.


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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.