Tips to Make Money (and Avoid Losing It)

Common sense financial advice somehow doesn't seem like a real "tip," and, yet, most people could learn a thing or two from seemingly obvious, cautionary tips.

Everybody loves tips, even — and sometimes especially — if the source is questionable and the tip seems somehow sly. Kind of like a tout sidling up to you at the horse track whispering "Banana Split in the fifth. Can't miss." Or some random doctor in the hospital cafeteria with some notion he heard from his brother-in-law.

Common sense financial advice somehow doesn't seem like a real "tip." But here are some culled from the "can't miss" section of my clippings library via people who actually know something useful and are willing to share.

On the common sense, dull side, Frank Armstrong, the author of The Informed Investor, tells the get-rich-quick folks (and you know who you are) what you do not want to hear: "The truth is that time is an investor's most valuable ally. Returns increase exponentially over time. Therefore, having time on your side is a key element to financial success."

In other words, start early, start small if you have to, but stick with it and you will win. It always amazes me how many doctors aren't content to get rich slowly.

Leaning on the time factor for success, the Warren Buffett of the otherwise dull and non-tip-like "buy and hold" school, isn't sexy or exciting, but most advisors who don't depend upon selling you something ("Today before the market changes!") say that investors who tend to receive the least information end up with more than those who overwhelm themselves with the "noise" from Wall Street and trade too often. In other words, check the market every day at your peril.

Likewise the dull, cautionary John Lawrence Allen, who wrote Beware! How to Protect Your Money From Wall Street, coyly adds that "...if your (salesman's) advice was so good, he/she wouldn't need your business."

A gentler way of rehashing the old asking, "Where are the customer's yachts?" Another vote for fee-based financial advisors, not commission based.

I always focus on process, how to make money, rather than on the substance of what to invest in, because it counter intuitively turns out that what you invest in is not nearly as important in the end as how you invest — save regularly, put it in a tax-sheltered vehicle, etc. So here we go for a few, seemingly obvious, cautionary tips for the purchase side.

1. Never buy anything offered to you over the phone. Never, not once.

2. If you don't want to own it forever, don't buy it in the first place. Ala Buffett.

3. Do not get suckered by titles. Like frozen dinners, the box always looks better than what is inside. Everybody who cajoles you is always the vice president or portfolio manager or financial consultant of some high-sounding firm. "Dewey, Cheatem and Howe" of NPR's "Click and Clack" program comes to mind.

4. If you can't explain it, don't buy it. Sit down with your spouse or teenager and describe what the investment is, what the company or financial vehicle does and how you are going to earn money from your purchase. For most of us, this eliminates "puts, calls, derivatives, collateralized futures and short sales."

5) Don't even think about regret. "The one that got away," leaving money on the table," woulda, coulda, shoulda, have no place in planning for your future. Real opportunity exists in thoughtful planning, not impulsive decision making and make sure you do it on your time line, not someone else's. Fantasy, hope and false deadlines are not worthy of consideration. That lets out some of us!

6) Never make financial decisions with the primary goal of saving or avoiding taxes. No one likes paying taxes, but any business person knows, unlike our politicians, that taxes are usually the last thing that you review when setting about making money. A factor, of course, but "tax free" and "tax advantaged" should not be the prime driver of any decision making — in spite of your current frustration with Washington.

7) Lastly, walk away if you ever feel the slightest bit uncomfortable with the who, the what or the how of any aspect of investing and planning. This is your money and your life and there are lots of alternate paths to find your own comfort level. That's the "tip," from our guts, that we really need to listen to.