All the things that make us human make us terrible investors and you have to understand what they are and how to avoid them.

Bluntly put, there's no chance that your doctor, dentist, or attorney is a high-school dropout. Your stockbroker, however, just might be.

There are two kinds of investors, be thay large or small: those who don't know where the market is headed, and those who don't know that they don't know.

It's bad enough that you have to take market risk. Only a fool takes on the additional risk of doing yet more damage by failing to diversify properly with his or her nest egg. Avoid the problem-buy a well-run index fund and own the whole market.

Market risk is like taking a plunge into a cool pool ... a lot of people are finding out right now what their risk tolerance is.

While it is probably a poor idea to own actively managed funds in general, it is truly a terrible idea to own them in taxable accounts... taxes are a drag on performance of up to 4 percentage points each year... many index funds allow your capital gains to grow largely undisturbed until you sell... For the taxable investor, indexing means never having to say you're sorry.

The definition of investment is the deferring ofpresent consumption for future consumption. So, you dohave to be willing to defer. And there are a couple of tricks that you can use to save money. One of them is simply to pay yourself first.