One of the challenges about taking car trips is finding a good place to fill up the gas tank. Pull off the Interstate at an exit that promises a number of gas stations and you'll likely find a number of options, each advertising their prices on signs that you can read at a glance. Select the one with the lowest price, fill up the tank, and hop back on the highway, content that you got the best deal possible.

Until you reach the next exit, that is, where a gas station prominently displays its current prices, three cents less per gallon for regular! Now, instead of gloating about the good deal you got, you're filled with disappointment at the fact that you overpaid for your fill-up. If you had just waited until the next exit, you could have saved 45 cents!

Overpaying for any good or service is something that few people enjoy. Yet when it comes to investing, many individuals willingly overlook the costs of their portfolios.

With mutual funds, the costs are hidden in plain sight, which makes it even less surprising that investors pay little attention to the expenses of ownership. Are these investors being hoodwinked by brokers or advisors? Are they being bamboozled by snazzy fund marketing? Are they so easily swayed by snappy headlines and irrelevant (if factual) performance results?

There must be a reason that investors so willingly buy into mutual funds with high expense ratios, since some many high expense ratio funds exist. If investors acted sensibly, these expensive mutual funds wouldn't be around for long. Are you one of the gullible, or one of the wise?

One of the Mutual Fund Informer's basic principles of investing is to review the expense ratio and other costs of ownership of your funds. Funds with high expense ratios should be carefully considered before you decide to invest. You can learn about other mistakes that fund investors commonly make in the September 2012 issue's educational feature, "Top 5 Mistakes that Mutual Fund Investors Make."

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