OK. The financial panic seems to be over. No major investment bank has followed Lehman Brothers into that good night. AIG, Fannie Mae and Freddie Mac are totally, hopelessly bankrupt, but Uncle Sam is fully committed to keeping the zombies shuffling. And while some (many?) of America's banks are surely running on fumes, there's no doubt that the Federal Deposit Insurance Corporation will cover deposits to the statutory maximum -- maybe much further.

If you're like me and just about everybody I know, you lost a hefty chunk of your savings in the past year and have been too shell-shocked to revisit the scene of the crime. But duck-and-cover is not an adequate investment strategy for the long term. Some day you'll have to get back in the saddle. And the sooner you do, the more likely you'll be able to meet your savings goals -- whether it is college for the kids, a house in a better neighborhood or retirement before you're too old to enjoy it. Here's a few tips (ten of them, because the number makes for a catchier title) to ease the way back.

1. Risk could be your ally. The idea of risking money to make money seems so . . . 2006. But, truth be told, the alternatives look pretty grim. The returns on riskless investments (insured bank CDs, short-term U.S. Treasury securities) are wretchedly low -- probably negative when you factor in taxes and inflation -- and are very likely to stay low for several more years as the Federal Reserve pumps zillions into the banking system. On the other hand, the prospects for stocks and bonds looks pretty good providing the recession ends in 2010.

2. Advisors aren't the same as friends. Virtually everybody prepared to advise you on investments (I'm an exception) has a conflict of interest: they won't make a living unless somebody buys the financial products they're peddling. That doesn't mean you shouldn't seek advice, and take it if it seems sensible. But it does mean that you need to go the extra mile, doing your own research to confirm your first impressions and comparison-shopping wherever possible.

3. Fees can kill. When securities markets are flying high, it's tempting to ignore the costs of investing. Who cares whether you pay .3 percent or 1.3 percent each year to the geniuses who run your mutual fund if the fund appreciates by 20 or 30 percent. But, as we now know too well, bad years have a way of taking the sheen off good ones. And if the long term average return to your fund is really 6 percent not 20, an extra percentage point off the top each year will make a big difference.

4. Stock-picking is for suckers. Yes, it probably makes sense to own stocks if you can bear some risk (see Tip #1) and don't expect to need the cash anytime soon. But there are a thousand good reasons not to try to pick winners yourself. It takes time, which probably could be spent earning an honest living or playing paintball with the kids. It is relatively costly, even in an era of low-cost online brokers. And it takes a will of iron not to treat stock-picking as a socially respectable alternative to casino gambling. Far, better, then, to do your investing through mutual funds.

5. Stock-picking is for suckers, Part Deux. So you already knew that mutual funds were the better way to go. Bet you didn't know that the high-octane nerds at mutual funds who are paid fortunes to do the picking on your behalf very rarely do better than they would by throwing darts at The Wall Street Journal. Yes there are exceptions: Warren Buffett and David Swenson (the guy who transformed Yale University's endowment from a large fortune to an humongous one) come to mind. But virtually all the serious research on the subject concludes that your mutual fund is very unlikely to beat the market in the long run. So buy mutual funds, by all means. But buy index mutual funds that use computers to track the returns of the relevant market and charge shareholders a pittance for the effort.

6. Past performance is no indicator of future performance. If you've ever read a mutual fund prospectus, you've read those words. But dollars to doughnuts, you ignored what you read. Don't: the same researchers who have proved (to my satisfaction anyway) that mutual fund managers rarely do better than those proverbial monkeys at the typewriter have also shown that it gets you nowhere picking mutual funds by last year's (or last decade's) successes. So what's a body to do? See Tip #5.

7. Remember about inflation. This year, thanks to the long-term efforts of the Federal Reserve and the short-term consequences of the worst economic downturn since the Depression, the cost of living will hardly go up at all. I'm pretty sanguine about next year and the next, too. But there's no telling what will happen five or ten years from now, and there are reasons to be scared. Among them: trillion-dollar federal budget deficits, out-of-control medical costs and the patience of the Chinese government, which will one day stop lending us the money to buy their tube socks and flat-screen TVs. You can't do much about inflation. But you can protect yourself from the worst consequences by thinking twice before making long-term, fixed income investments.

8. Diversify, diversify, diversify. Yeah, you've heard this one before, too. But I've got a few things to add. First, it is dumb to load up your 401(k) plan with the stock of your employer. You've already made a big bet on your employer's future success simply by choosing to work there. Second, real diversification is very hard. For example, buying a mutual fund that owns European stocks instead of the domestic sort won't do a lot of good since European stock markets usually fluctuate in synch with their American counterparts. Real diversification is possible, but you gotta do your homework (or pay someone else to do it).

9. Bet against the dollar. The exchange value of the dollar has done better than well during the current crisis -- seems that, in a pinch, investors still see U.S. Treasury securities (which must be paid for with dollars) as a refuge from the financial storms. But logic says this won't last -- that investors (especially foreign government banks) will tire of holding so much of their assets in dollar-denominated securities and shift to euros, yen and eventually, Chinese renmimbi. How, then, can you hedge against a dollar rout cheaply and efficiently? Probably the best way is to buy exchange-traded mutual funds that simply track the exchange value of major foreign currencies.

10. Pay attention to your portfolio, but not much. For those who have been afraid even to glance at their portfolios since the stock market cratered, this may sound like preaching to the choir. But when markets start going up, so will the temptation to look frequently -- and to chase the next hot tip and the next. The sort of portfolio I like -- one consisting of a handful of index funds -- should be tailored to your age, income and taste for risk. Once you've got it right, don't change it unless the circumstances of your life (as in age, income and taste for risk) change.

Copyright 2009 Peter Passell, author of Where to Put Your Money NOW: How to Make Super-Safe Investments and Secure Your Future
 

Peter Passell, author of Where to Put Your Money NOW: How to Make Super-Safe Investments and Secure Your Future, is a senior fellow at the Milken Institute and the editor of the Milken Institute Review, and has been a columnist for the New York Times. He is the author of many guides to personal finance, including Where to Put Your Money, The Money Manual, and How to Read the Financial Pages.