IT'S ALL ABOUT YOU, so much of the investment industry's advertising suggests: your financial security and your retirement in Tuscany, Bora Bora or another sun-dappled refuge from Canadian winters. There's some truth to this message, no doubt. Your fund company or brokerage firm would be just delighted if you made big money using its services or products. Mostly, though, the financial industry is interested in generating huge profits for itself.

Herein lies one of the toughest riddles that investors face when they get financial advice. Whose interests are being served-the investor's or the seller's? The best way to settle things: Assume the seller stands to benefit in any transaction, and then ask what that benefit is. From there, you can move on to how appropriate the investment is for your needs.

As for the investment professionals whom Mauboussin praises, they're out there. You'll find them at mutual-fund companies and higher-end money-management firms, but you have to look beyond the marketing hype churned out by the sales end.

DON'T TAKE THE CRACK about know-nothing investors to heart, because Buffett is one of the good guys in the investing world. He keeps things simple, he's in touch with the interests of the individual investor and his unparallelled record with Berkshire Hathaway gives him vast credibility.

So when Buffett proposes that non-expert investors buy index funds instead of professionally managed ones, it's worth paying attention. Index funds mirror the holdings of a particular stock index and charge low fees; professionally managed funds are run by people who pick stocks they think will outperform the index, and they're more expensive to own.

If it weren't for their fees, actively managed funds would be highly competitive with index funds. As it is, though, fees depress net returns in most equity funds to the point where average returns are typically less than what you'd make in an index fund. But, take note: Traditional index mutual funds aren't really the best way to exploit index investing. Exchange-traded funds, which trade like stocks and have much lower fees, are a better bet. However, Buffett doesn't like ETFs as much as index funds because it's so easy to trade them speculatively.

MALKIEL, LIKE WARREN BUFFETT, is a big believer in index investing. But his comment about fees (above) is universal enough to apply to all types of investments, not just index funds. Whether you're buying actively managed mutual funds, stocks, bonds, principal-protected notes or hedge funds, you're likely paying fees and commissions that eat into your returns.

Savvy investors accept the inevitability of fees and then do all they can to minimize them. This could mean choosing exchange-traded funds instead of mutual funds or, if you really like mutual funds, emphasizing low management expense ratios when narrowing down your short list. It also means being attuned to purchase and sales commissions on any investment and considering cheaper alternatives where possible.

Many people in the investing industry would like you to believe that the fees and commissions involved in owning their products are of little or no importance next to matters like management expertise and performance. This is self-interested nonsense, and it only serves to make fund companies and brokers richer than they already are.

MOST PEOPLE WOULD PROBABLY end up with boring investment portfolios if it weren't for two factors. One is the unavoidable chatter from friends and relatives who claim to have achieved killer results with their investing, and the other is the financial media's focus on the star stocks, funds and money managers of the moment. In a vacuum, making 8% to 10% a year on average sounds fine. But when you hear about a guy who doubled his money in the past few months, those returns seem almost embarrassing.

Some examples of the kind of boring investing that people should be doing: owning bonds, even while interest rates are low; keeping some money in cash, even though the returns are even lower than for bonds; and taking profits from successful -investments and putting them in underperforming holdings.

It may just happen that something risky finds its way into your portfolio. If so, keep a 5% cap on your little gamble and pay close attention. Limit your losses by selling if your pick fizzles, and be ready to lock in gains if you hit the jackpot.

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