Professional athletics is the art -- and increasingly the science -- of transforming sports from the commonplace into the surreal. Whether it's running, shooting baskets, golfing, or even driving a car, professionals take a familiar concept (I know how to swing a club) and bring it to an extreme of performance (a 7-iron 190 yards into the wind to 10 feet). It is physical activity hyperbolized.

Expanding that logic, it only makes sense that former Major League Baseball star Lenny Dykstra is reaching new heights of opportunities for the outflow of cash.

Pay the man
Nails, as the former Phillie and Met was known, has rolled out Players Club lifestyle magazine for athletes, which will serve as an entree into a suite of services. First on board was an audacious annuity that guaranteed $400,000 a year for life after you retired ... with a commission of just $550,000 for every $3 million in insurance premiums. Nails has had a change of heart since Sports Illustrated first reported that story. But he's still committed to helping professional athletes who are itching for less traditional ways to burn through their vast contracts.

Today, the Players Club website (actually just a single static page while the site is, presumably, under construction) tells us the product suite "endeavors to accentuate the positive aspects of being a professional athlete. ... For the first time in the 'World of Sports,' all athletes and their families, past and present, will have the opportunity to participate in this customized product designed to create cash flow after the athlete retires. This investment vehicle will be unparalleled, as it will guarantee the income the player and his family chooses post-retirement."

Seems like a fantastic idea
Never mind the fact that Lenny has taken out at least $20 million in loans, has been sued by a former business partner and his tax preparers, and has admitted to losing $78,000 to a Mississippi gambler. Oh, and Doubledown Media, Dykstra's partner in the magazine venture, is suing Dykstra just one issue into the endeavor to recover the more than $500,000 that Dykstra already owes it.

While investing in such a high-cost, high-risk venture might seem as reasonable as running headfirst into a centerfield wall, it's actually just transforming what is now commonplace in the investing arena (mediocre returns with high fees) into the surreal (mediocre returns with insanely high fees).

The dreaded double play
Not all mutual funds are money-sucking wells of underperformance ... just most of them. That's why bad funds are the best investment for a terrible retirement -- you'll pay a lot for the privilege of trailing the market. But the fact is that there's no need to sacrifice huge chunks of your assets up front, whether it's 2% to the fund's expense ratio or the Dykstranian 18% that was initially proposed for the honor of handing over your cash.

The vast majority of actively managed funds lags behind low-cost index trackers such as the Fidelity Spartan 500 Index (FUND: FSMKX) or the popular exchange-traded fund SPDRs (AMEX: SPY). The actively managed funds manage to dig themselves a performance hole out of the gate by dinging your portfolio with fees, then lose even more ground in the struggle to catch up. It's a losing combination.

Even with write-home-about-it performance, the climb might prove too steep over time. The legendary Bill Miller, manager of the concentrated large-cap Legg Mason Value Trust, bested the S&P 500 index for an amazing 15 years running, but he just finished his second consecutive year of underperformance despite the successes in 2007 of top holdings (Nasdaq: AMZN) and Google (Nasdaq: GOOG).

In the end, his fund couldn't overcome a 1.7% expense ratio combined with the performance of the health-care and financial services sectors, which together accounted for more than 30% of the fund's holdings. Specifically, he paid the price for his large bet on Countrywide Financial (NYSE: CFC), the struggling mortgage company in which Legg Mason is now the largest shareholder. And the downward trend has continued as UnitedHealth (NYSE: UNH), the fund's third-largest holding at the end of 2007, and Aetna (NYSE: AET), the next largest on the list, jumped off a cliff arm-in-arm earlier this year.

Finding the gaps
It might lack the "prestige" of a Players Club, but there are ways to build success for the future without a lot of expenses today.

  • Consider index funds for a portion of your savings; they're good for broad diversification and low fees.
  • Avoid funds that charge a load, the mutual fund industry's equivalent of undercoating for your new car.
  • Look only for funds with below-industry-average expense ratios.
  • Consider tax-inefficient funds (e.g., those with high turnover ratios) in tax-efficient accounts like an IRA.

Even in the midst of our market turmoil, there are funds out there that are capable of significant outperformance and that clock in with expense ratios below 1%. Finding them is the goal of our Motley Fool Champion Funds service, and it has pulled together a roster of low-cost, high-performing winners.

You can take a look at all of those fund picks with a risk-free 30-day free trial.

Roger Friedman owns shares of SPDRs, but no other securities mentioned. The Motley Fool owns shares of SPDRs. Amazon and UnitedHealth are Motley Fool Stock Advisor recommendations. UnitedHealth is also an Inside Value selection. The Fool has a disclosure policy.