Are you the type of person who asks, "Why can't radio stations play 'Free Bird' and 'Stairway to Heaven' more often?" If so, consider the following top 10 investment tips gleaned from the ancient texts of classic rock.

10. "Hotel California," The Eagles (1977)
"We are programmed to receive.
You can check out any time you like
But you can never leave."

Stay liquid: If a fund requires the manager to approve of redemptions, you should understand that in a difficult environment, the manager

2010 Investment Guide

Average Investor Is His Own Worst Enemy

Building A Portfolio To Weather Inflation

may decline your request. Speak with your advisor about the balance between earning extra income and maintaining necessary liquidity. The liquidity characteristics of money funds, bank money market accounts and bond funds differ considerably. Each has a role for someone, but that person may or may not be you. (To learn more, see Diving Into Financial Liquidity.)

9. "Tax man," The Beatles (1966)
"(If you drive a car, car)
I'll tax the street
(If you try to sit, sit)
I'll tax your seat.
(If you get too cold, cold)
I'll tax the heat
(If you take a walk, walk)
I'll tax your feet."

Consider the tax effect on withdrawals: Taxes may seem unavoidable, but you can control when to buy or sell assets. Be careful about buying into a mutual fund that is about to declare a dividend and, in the U.S., also about whether the interest earned on municipal bonds is potentially taxable (i.e., included in pre-tax income for the calculation of the alternative minimum tax). It may also make sense to draw from your after-tax accounts rather than tax-deferred accounts. (For more tips, see Using Tax Lots: A Way To Minimize Taxes.)

8. "Lady Madonna," The Beatles (1968)
"Lady Madonna, children at your feet,
Wonder how you manage to make ends meet.
Who finds the money when you pay the rent?
Did you think that money was heaven sent?"

Plan and then plan again: Committing yourself to a realistic investment plan requires understanding your resources and obligations, as well as the essential attributes of the lifestyle you desire in the future. As you plan your investment strategy, leave room for investment underperformance. Committing your plan to writing may force you to address issues that you might otherwise glide over.

7. "Stairway to Heaven," Led Zeppelin (1970)
"There's a lady who's sure
All that glitters is gold
And she's buying a stairway to heaven."

Don't be dazzled by fancy new investments: If you cannot understand the description in the prospectus, consider not making the investment. The investment risks section, in particular, warrants your attention.

6. "Takin' Care of Business," Bachman Turner Overdrive (1973)
"If it were easy as fishin',
You could be a musician,
If you could make sounds loud or mellow
Get a second-hand guitar
Chances are you'll go far
If you get in with the right bunch of fellows"

Get help: Investing successfully is hard. For that reason, many investors engage an investment advisor. If you don't feel comfortable discussing all your financial concerns with your advisor, look elsewhere. Your advisor needs you to provide a frank assessment of your goals and resources. You will be more likely to meet your needs if your advisor understands your views of acceptable and unacceptable outcomes. (Find out how to find an advisor that will work for you in Finding The Right Financial Advisor.)

5. "Sympathy for the Devil," Rolling Stones (1968)
"But what's puzzling you
Is the nature of my game, um mean it, get down
(woo woo, woo woo)"

Check out your advisor's record: The Securities and Exchange Commission (SEC) and state regulators maintain databases for brokers, brokerage firms and investment advisors. Some investment advisors report to state securities regulators. If your advisor is state regulated, consult the North American Securities Administrators Association. (If you have a problem with your advisor, there are steps you can take. Read Tips For Resolving Disputes With Your Financial Advisor.)

4. "When I'm Sixty-Four," The Beatles (1967)
"Will you still need me
Will you still feed me
When I'm 64."

View promises and projections with suspicion: You may want to introduce some setbacks into your projections, such as a period of inflation, a sustained drop in equities, or more onerous tax provisions affecting Social Security. You should plan on being able to meet your goals even if some projected income fails to materialize. Perhaps when you harvest your investments, you'll be pleasantly surprised--but don't count on it.

3. "My Generation," The Who (1965)
"I hope I die before I get old (talkin' 'bout my generation)"

Avoid outliving your money: The average couple grossly underestimates how long the surviving member is likely to live. In addition, the older you are, the longer your life is likely to be. At birth, a girl in the U.S. can expect to live, on average, 80 years, according to the Social Security Administration. Those who actually reach age 80, however, can expect to live, on average, an additional nine years, to age 89.

2. "Dream On," Aerosmith (1973)
"Everybody's got their dues in life to pay…"

Watch expenses: Even before compounding, reducing what you're paying to mutual funds to manage your money by 1.5% annually can increase your wealth accumulation by 15% over 10 years or 30% over 20 years. As a result, index funds tend to outperform actively managed funds.

1. "Teach Your Children," Crosby, Stills, Nash & Young (1970)
"You who are on the road
Must have a code that you can live by"

Consider an advisor dedicated to your interests: Advisors who accept fiduciary duty must consider your interests before their own. That standard does not apply to everyone who claims to be an investment advisor or account executive. The SEC imposes a fiduciary standard on registered investment advisors. CFA Institute requires chartered financial analysts to observe this standard, regardless of jurisdiction.

This article was provided to Forbes by the CFA Institute.

Related Articles
  1. Active Trading Fundamentals

    How Hedge Funds Front-Run Index Funds to Profit

    Understand what front running is, and learn how hedge funds use this investing strategy to profit from the anticipated stock buys of index funds.
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Professionals

    Index or Target Dates in 401(k)s: Which is Better?

    A common question is whether or not plan participants should choose index or target date funds in a 401(k). The answer depends on different scenarios.
  4. Mutual Funds & ETFs

    What's The Difference Between Bond & Equity ETFs?

    Learn how different stock ETFs and bond ETFs are, though they actually have quite a few things in common.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Russell 1000 Growth

    Learn about the iShares Russell 1000 Growth ETF, including how the fund is constructed, its holdings and its strong recent performance.
  6. Economics

    China's Crisis Caused by Unhealthy Stock Market Growth

    Learn how China's stock market rallied to unsustainable highs due to increased margin lending to retail investors and has since dropped rapidly.
  7. Mutual Funds & ETFs

    No Load Vs. Index Fund: Is One Better Than the Other?

    Find out how no-load funds, index mutual funds and ETFs can help investors boost returns just by cutting down on expenses and sales charges.
  8. Investing

    What Are The Three Key Elements of a Bond ETF?

    We explore the bond ETFs basics, because the only way to appreciate the benefits that this type of investment offers is to first understand how they work.
  9. Mutual Funds & ETFs

    The Top 3 ETFs For Investing in the US Economy

    Find out more about exchange-traded funds that track the U.S. economy, such as the SPDR S&P 500 ETF Trust, Vanguard S&P 500 ETF and the SPDR S&P 400 MidCap ETF.
  10. Investing

    How to Navigate Today’s Bond Markets?

    Bond markets today are presenting investors with multiple challenges, since unconstrained bond funds are an alternative solution worth considering.
  1. Next Generation Fixed Income (NGFI) ...

    A Next Generation Fixed Income (NGFI) manager is a fixed income ...
  2. Next Generation Fixed Income (NGFI)

    Next generation fixed income is an innovative approach to investing ...
  3. Annual Crediting Cap

    The maximum rate of index growth that an annuity will be credited ...
  4. Security Market Indicator Series ...

    An index that uses the performance of a sampling of securities ...
  5. Factor Investing

    An investment strategy in which securities are chosen based on ...
  6. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
  1. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  2. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  3. What are the most important equity market indexes?

    The most important equity market indexes are the S&P 500, Nasdaq Composite and Russell 2000. These indexes in total provide ... Read Full Answer >>
  4. What is the 12b-1 fee meant to cover?

    A 12b-1 fee in a mutual fund is meant to cover the fees of companies and individuals through which investors of a fund buy ... Read Full Answer >>
  5. What is the difference between a smart beta fund and an index fund?

    An index fund often uses the market capitalization of component companies as the basis for constructing the index. In contrast, ... Read Full Answer >>
  6. What is the difference between the QQQ ETF and other indexes?

    QQQ, previously QQQQ, is unlike indexes because it is an exchange-traded fund (ETF) that tracks the Nasdaq 100 Index. The ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!