High investment costs remain out of sight and out of mind when overall returns are strong. Why sweat decimal points when basking in 20 percent gains?

But when returns turn meager or slide downward, as they have in 2008, hefty expenses become visible and painful.

While investors can find low-cost mutual funds, exchange-traded funds (ETFs) and bank accounts these days, it requires research and willingness to read fine print.

"Keeping investment expenses low was important a decade ago but now is critical," said Harold Evensky, certified financial planner with Evensky & Katz in Coral Gables, Fla. "You can't control markets, but you have some control over expenses and that is important in a low-return environment."

The sad reality is most investors pay no attention to expenses, Evensky said, including the fees they're paying on retirement accounts.

The average mutual fund's annual expense ratio had fallen from 1.00 percent to 0.90 percent from 2003 through 2006, according to Morningstar Inc.

However, it remained stagnant at 0.90 percent in 2007, and costs of some asset classes rose. Overall increases may be ahead.

The annual expense ratio represents recurring management fees as a percentage of fund assets. It includes managerial expenses, administrative costs, 12b-1 marketing fees and other operational expenses.

"Mutual fund expenses have flattened out — going down for international funds but up in other areas such as balanced (stock-and-bond) funds," said Russel Kinnel, director of mutual fund research for Morningstar in Chicago, who says too many investors put money in popular but high-cost funds. "There are a lot of different fund markets, some sensitive to fees and others indifferent to them."

International fund fees have gone down because their large asset inflows have driven down overall costs of running them, Kinnel explained. That's not the case with most domestic funds, whose outflows halted previous downward fee momentum.

"Some investors who buy mutual funds based on performance actually end up buying low-cost funds because low costs do contribute to better performance," observed Kinnel. "There are plenty of low-cost funds, but you must exert discipline in using their expense ratios as a good first screen on finding those that are low in cost."

Though not alone among fund companies with low costs, Vanguard Group remains the low-cost leader. Kinnel points to Vanguard Total Stock Market Fund Index (VTSMX), a "no-load" (no sales charge) fund. It features a low annual expense ratio of 0.15 percent, requires a $3,000 minimum initial investment and has a three-year annualized return of 9 percent.

Exchange-traded funds, those increasingly popular baskets of securities traded like individual stocks on an exchange, offer another low-cost opportunity. They can be bought and sold throughout the trading day. Most have lower expense ratios than mutual funds, though you must pay a commission to buy and sell their shares.

Exchange-traded funds used to be purely index funds and were therefore extremely low-cost. But as more focused and intricate ETFs are increasingly introduced, expense ratios have been rising, according to Tom Roseen, research manager for U.S. and Latin America with Lipper Inc. in Denver.

"While people think ETFs will always have the lowest expense ratios and always be tax-efficient, that's not necessarily true," warned Roseen. "Costs are rising for those ETFs that require more research and intervention."

ETF expense ratios are still usually lower than conventional mutual funds, though not always. Vanguard Total Stock Market ETF (VTI) has an annual expense ratio of 0.07 percent, lower than its mutual fund counterpart, while HealthShares Euro Drugs ETF (HRJ) has an expense ratio of 0.99 percent.

"You see an ETF range from really cheap expense ratios — a couple of basis points — to those in the .80 and .90 range," said Roseen. "At that point, you can start matching them up against the expense ratios of funds offered by American Funds, Vanguard and the like."

Fees at banks are on the rise but can generally be avoided altogether with smart planning.

Read fine print when shopping for bank accounts to determine the fees you could wind up paying. A recent study by the General Accounting Office said the large amount of fees paid by consumers in checking and savings accounts raised "questions about consumers' awareness of their accounts' terms and conditions."

"Bank fees have been marching steadily higher for the past decade, particularly punitive fees such as bounced-check fees," said Greg McBride, senior financial analyst with Bankrate.com in North Palm Beach, Fla. "ATM surcharges and credit card late fees and over-limit fees have increased most notably."

Free checking is widely available, said McBride. It provides the saver with a transactional account unencumbered by balance requirements or heavy fees, freeing up money you can then devote to higher-yielding investments.

"With a savings account at the same bank where you have your checking account, you can link the two together, so your savings account will serve as overdraft protection," advised McBride. "That's an important line of defense against overdrawing your account."

Online access to your account, which is available to you 24/7, can also help you avoid late and other fees, he added. Finally, find the location of a nearby ATM where you can make free withdrawals, monitor your available account balance, and avoid overdraft and other charges, he concluded.

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, P.O. Box 874702, Tempe, AZ 85287-4702, or by e-mail at [email protected]