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. Fundamental Analysis

    3 Long-Term Investing Strategies With Strong Track Records

    Learn why discipline and a statistically valid investment strategy can help an investor limit losses and beat the market over the long term.
  2. Mutual Funds & ETFs

    The 5 Best US Small Cap Value Index Mutual Funds

    Find out which index mutual funds do the best at investing in small-cap value stocks for higher potential returns at the lowest cost.
  3. Investing

    New Year, New Investing Strategy: Exploring ETFs

    Whether you’re a seasoned investor or new to the markets, you need to learn as much as you can about the present environment and how to navigate it.
  4. Mutual Funds & ETFs

    The 4 Best U.S. Equity Index Mutual Funds

    Find out which four index mutual funds are among the best U.S. equities index mutual funds for core holdings in your investment portfolio.
  5. Mutual Funds & ETFs

    The 4 Best U.S. Large Cap Index Mutual Funds

    Discover the top four mutual funds that use passive investment approaches and follow stock indexes composed of U.S. large-cap equities.
  6. Mutual Funds & ETFs

    The 4 Best U.S. Fixed Income Index Mutual Funds

    Discover the top four fixed income mutual funds that follow passive investment strategies by tracking the performances of various benchmark indexes.
  7. Mutual Funds & ETFs

    The 4 Best International Equity Index Mutual Funds

    Discover the top four mutual funds that invest in international equities by using a passive investment approach and following foreign stock indexes.
  8. Investing

    Index Funds Explained

    Indexing strategies have been around for long, but many investors still don’t understand what a powerful tool they can be when constructing a portfolio.
  9. Investing Basics

    The Pros and Cons of Indexes

    Learn about the advantages and disadvantages of stock indexes and passive index funds. Discover how there is an opportunity cost to using index funds.
  10. Mutual Funds & ETFs

    Vanguard Target Date Funds Overview

    Learn about target-date retirement funds offered by Vanguard. Discover how portfolio managers automatically rebalance the portfolios for the funds.
RELATED FAQS
  1. Have hedge funds eroded market opportunities?

    Hedge funds have not eroded market opportunities for longer-term investors. Many investors incorrectly assume they cannot ... Read Full Answer >>
  2. What fees are associated with target-date funds?

    Target-date funds have two types of fees. The first type of fee is paid to the company managing the fund and selecting the ... Read Full Answer >>
  3. Some of the Best No-load Funds to Consider

    Some of the most well-known no-load funds are the DoubleLine Total Return Bond Fund (DLTNX), Vanguard Short-Term Investment-Grade ... Read Full Answer >>
  4. Can mutual funds fail?

    Mutual funds can fail. Unlike bank accounts, there is no Federal Deposit Insurance Corporation (FDIC) or similar agency that ... Read Full Answer >>
  5. How do mutual fund managers make money?

    Mutual fund managers get base salaries, which vary greatly depending on the size and pedigree of the fund company. They may ... Read Full Answer >>
  6. Can mutual funds invest in IPOs?

    Mutual funds can invest in initial public offerings (IPOS). However, most mutual funds have bylaws that prevent them from ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  3. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  5. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  6. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
Trading Center