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.

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