Andrew Tobias

Andrew Tobias

Andrew Tobias's 'The Only Investment Guide You'll Ever Need' (Harcourt) has sold more than a million copies. A graduate of Harvard College and Harvard Business School, he has written extensively for such publications as Time , Worth , and Parade .

Personal finance tips

1. A luxury once sampled becomes a necessity. PACE yourself.

2. Pay off your credit cards!

   Not having to pay 18% on a credit card is as good as earning 18% -- tax-free, risk-free.

3. Buy in bulk when things are on sale.

   You can easily stretch $1,000 to buy $1,400 of the very same items you'd have bought in the course of the year anyway. That's a 40% tax-free, risk-free return on your investment. Avoid doing this with alcohol, caviar or candy .

4. Buy low-expense, no-load fund mutual funds.

   In the investment race, over the long run, the horse with the lightest jockey - the lowest expense ratio - usually wins.

5. People who buy stocks when they get a bonus and sell when they need a new roof are entrusting their investment strategy to their roofs.

6. If you buy individual stocks, use a deep-discount broker.

7. Don't buy things that are fairly valued. Buy things that are UNDERvalued.

8. People who try to get rich quick generally get what's coming to them.

9. If it looks too good to be true, it probably is.

   Aesop probably said that, and maybe his great-great grandfather, too. But when I first wrote it, it seemed original.

10. As Jerry Goodman (Adam Smith) so aptly advised - 'Don't fall in love with your stock. It doesn't know you own it.'

11. Beware the permanent trend. Nothing lasts forever.

12. Beware spreads .

    Always check to see how much you would lose if the item you bought today you immediately sold tomorrow.

13. Heed the words of Billy Rose, the old vaudevillian: 'Never invest in anything that eats or needs repairing.'

14. Be a buyer, not a sellee - figure out what you need, and then shop around for the best deal.

    Don't invest in something because your old college chum, let alone a stranger, is pitching it to you.

15. Diversify - over asset classes, specific stocks, and over time.

    For most people, the best strategy is a lifelong program of steady monthly investing in low-expense, no-load index funds.

16. And then the most obvious, and least original: Buy things when nobody wants them; sell when everybody does.

    Or as Bernard Baruch famously put it: "Buy straw hats in the winter. Summer will surely come."

www.andrewtobias.com