When the nest egg is finally big enough it is time to scour the banks, insurance companies and newspapers for investment opportunities. Unfortunately, new products hit the market each week and overwhelmed consumers are finding it hard to sort the wheat from the chaff.

Unit-linked investment funds are one of the most popular choices for those with between £2,000 (€2,539) and £5,000 to invest. The mutual nature of the investment means costs tend to be lower than with direct investment. Besides, buying shares through stockbrokers is not really an option as many are refusing to talk to investors who want to invest less than £20,000.

Once consumers decide if a fund is best for their personal situation, fund management charges are an important issue to examine before writing the cheque.

Compared to other countries, the Republic's fund charges are quite high. In the United States for example, most mutual funds charge a nominal fee due to fierce competition for business.

Entry charges: Initial charges usually take the form of an entry charge based on a bid/offer spread or the difference between the price at which an investor can buy units in the fund and the price he will get when he sells them. The charge typically varies from 2 to 5 per cent, depending on the amount being invested. The more money invested, the lower the charge is likely to be.

Mr Alan Flynn, managing director of BDO Simpson Xavier Financial Services says: "If a person has £5,000 to invest and there is a bid/offer spread of 5 per cent, then only £4,750 is used to purchase units and it's those units that are invested."

Surprisingly, it is possible to get an allocation of more than 100 per cent. Some companies do a special product launch with a 1 per cent bonus meaning 101 per cent of the monies are invested, says Mr Flynn.

More companies are binning bid/offer spreads and moving to a single pricing policy that allows investors to buy and sell units at the same price.

Exit penalties: Instead of an entry charge, investors may be charged an early exit penalty for leaving the fund before a certain date.

This type of charging structure is good because investors are encouraged to invest over the medium to long term.

Some products are using a "54-3-2-1" structure which means entry or set-up charges should be eliminated or reduced, says Mr Flynn. The structure for a five-year product would be: a 5 per cent penalty if the funds were withdrawn in year one, 4 per cent in year two, etc. Annual management fee: Most funds also charge an annual management fee, which ranges from 0.75 at the lower end to 2 per cent at the higher end of the scale.

Charges vary from company to company so consumers should read the fine print.

"The lower the fee, the more competitive the product is going to be but that doesn't necessarily mean it's a better product," says Mr Flynn The 2 per cent annual fee is usually charged by property funds because the expenses in running the fund are greater. For example, the properties must be valued and checked on a regular basis, he says.

An annual management fee might increase to 1.25 per cent if the product's bid/offer spread were eliminated but this was not necessarily always the case, he said.

The choices: For investors with £5,000 to place in a lump sum product the choices are vast. Mr Flynn estimates that 30 or 40 products are available to these investors.

Some lump-sum products, include unit-linked funds, collective investment products, tracker bonds, managed funds and index tracking funds, says Mr Flynn.

"If choosing between two similar products, you look at the customer's objectives, risk profile, identify the products, then get down to costs within the product," says Mr Flynn.

Obtaining proper advice: It is important to do your homework and if you do not have the time, or expertise, consider hiring an independent fee-based adviser. If a product is purchased through a broker or adviser, they will charge commission or a flat fee in addition to any fees charged by the fund itself. Given the complexity of the industry, most people turn to experts for advice and good advice rarely comes free.

Until commission disclosure is a reality, consumers should insist that their broker or insurance intermediary reveals all commission and other charges, as well as the charges' likely impact on the value of the fund for each year of its existence.

Consumers should also bear in mind that fee-based brokers are more likely to recommend products with low initial charges and no commission.