Where to Get Great Investment Advice for Free You can save thousands of dollars by taking advantage of information that is available just for the asking.
By Bruce Hager

(MONEY Magazine) – Most avid investors believe that you have to spend money to make money. They frequently subscribe to newsletters costing as much as $150 a year and are willing to pay financial advisers up to $125 an hour. This money may be well spent and is often repaid many times over through greater profits. But before you write a check for investment advice, you should take advantage of the abundance of information available just for the cost of the stamp needed to write and ask for it. A multitude of corporations, investment groups, brokerages and accounting firms provide free publications. In some cases, of course, this material is essentially advertising, encouraging you to do business with them. But if you are selective and willing to take the time to find publications that are more worthwhile, you can easily obtain free information that would cost thousands of dollars a year to buy. Although it may sound obvious, the best place to start is your local public library. Most libraries get a diverse assortment of business and investment magazines (including Money). The most useful are investment guides such as Value Line and Standard & Poor's for stocks and the annual Wiesenberger Investment Companies Services for mutual funds. These publications contain a wealth of information, such as the earnings records and business outlook for stocks and the performance history for funds. Next, you should contact brokerage firms in your area to see what material they are willing to provide to investors who are not already their clients. Many brokerages, for instance, offer free investment seminars to the public in hope of attracting new customers. And among the publications that large firms provide, some are informative and genuinely helpful. Merrill Lynch, for example, gives away a 30-page booklet titled How to Read a Financial Report. This publication, available for free from your nearest Merrill Lynch office, offers a step-by-step introduction to basic accounting methods that will help you interpret the annual reports published by most corporations. If you are an experienced investor able to do some advanced analysis on your own, you can also obtain free reports of economic data from the 12 Federal Reserve Banks. For instance, the Dallas Fed (Public Affairs Department, Station K, Dallas, Texas 75222) publishes a bimonthly economic forecast in its Dallas Fed Economic Review and the St. Louis Fed (Public Information Office, P.O. Box 442, St. Louis, Mo. 63166) provides data on interest rates and money growth in its monthly Monetary Trends report and weekly U.S. Financial Data booklet. Sometimes, the best advice you can get is how to avoid bad advice. The National Futures Association (800-621-3570, 800-572-9400 in Illinois) publishes a 20-page pamphlet titled Investment Swindles -- How They Work and How to Avoid Them, which explains the workings of rip-offs such as Ponzi schemes and ''infallible'' forecasting scams and tells you how to protect yourself against them. Once you have availed yourself of such free general advice, you may want further guidance about specific investment topics. After surveying more than 30 sources, including leading brokerages and accounting firms, MONEY has collected tips on where to obtain free information on the following six subjects:

Portfolio strategy Stock investors should begin their research by developing a broad market overview. One of the best ways to start is by writing for the annual report of Berkshire Hathaway, a diversified holding company with revenues of $2.2 | billion, whose chairman Warren E. Buffett is widely regarded as one of the best investors in the world. Buffett has increased Berkshire Hathaway's earnings at an average annual rate of 23.3% over the past 22 years. In a humorous and intelligible shareholder's letter in Berkshire's annual report, he expounds at length each year on the stock and bond markets. In past reports, Buffett has explained why he invested in risky bonds and why last year there appeared to be no worthwhile investments to be made. Both the 1986 annual and a compilation of Buffett's letters to shareholders from 1979-85 are available by writing to Berkshire Hathaway, 1440 Kiewit Plaza, Omaha, Neb. 68131. Other companies whose annual reports sometimes provide information on the general market outlook include General Electric, Security Pacific, Pacific Gas & Electric and Dennison. Addresses for these companies can be found in Value Line or Standard & Poor's.

Stock ideas While timely information on blue-chip stocks is readily available in the business pages of most newspapers, smaller companies are harder to follow and sometimes difficult even to discover. Some of the best sources of ideas for investors in emerging growth stocks and special situations are the annual and quarterly reports of top-performing mutual funds. By looking at the listing of a fund's portfolio, you can see what companies are attracting the attention of savvy fund managers. Since such information will necessarily be dated, you should not treat it as a buy recommendation. Instead, you will be able to compile a list of promising stocks that deserve further research; you should then look up their earnings records and balance- sheet statistics in Value Line or Standard & Poor's. Among the managers whose fund portfolios merit such attention: Charles Allmon (Growth Stock Outlook Trust, 4405 East-West Hwy., Bethesda, Md. 20814), who focuses on the shares of small growth companies; Mario Gabelli (The Gabelli Asset Fund, P.O. Box 1634, Grand Central Station, New York, N.Y. 10163), who specializes in the stocks of companies selling below their private market value; Ralph Wanger (The Acorn Fund, 2 N. LaSalle St., Suite 500, Chicago, Ill. 60602), who concentrates on small stocks with long-term growth potential; Barry Ziskin (Z-Seven Fund, 90 Broad St., New York, N.Y. 10004), who favors stocks with low price/earnings ratios and earnings growth rates of 20% a year or more; and Binkley Shorts (Over-the-Counter Securities Fund, & Suite 325, 510 Pennsylvania Ave., P.O. Box 1537, Fort Washington, Pa. 19034), whose fund holds more than 350 over-the-counter stocks.

Income investing Many brokerages and accounting firms provide free brochures on fixed-income securities. Merrill Lynch, for example, publishes Short-Term Fixed-Income Investments, which discusses Treasury bills, money-market securities and commercial paper. E.F. Hutton offers Corporate Bonds, which explains bond market terminology, such as the difference between current yield and yield to maturity, and the character of junk, deep-discount and zero-coupon issues. For more sophisticated investors, Coopers & Lybrand publishes The Government Securities Market: Assessing Risks and Creating Controls, an informative 68-page booklet that describes strategies for investing in Treasury securities (available from Coopers & Lybrand, Publications Department, 1251 Ave. of the Americas, New York, N.Y. 10020). If you decide to invest in Treasuries, you can register in the Treasury Direct program and buy securities with no commissions by writing to the Federal Reserve Bank for your region.

Tax planning The 1986 Tax Reform Act was the biggest event in tax planning since 1954. Most major accounting firms and brokerages responded by publishing explanations of the act and its implications for taxpayers. Touche Ross' free 74-page Executive Summary, for instance, is still available from the company's Washington Service Center (Communications Department, 1900 M Street N.W., Washington, D.C. 20036). Other firms also publish guides and strategies for individual and year-end tax planning. Although most were written with 1986 in mind, the tax advice is still applicable in 1987 and will probably be updated in the near future. For the past two years, Deloitte Haskins & Sells has published a guide called Personal Tax Planning that discusses techniques for estimating tax liability, timing transactions and avoiding estimated-tax penalties. The booklet is available at Deloitte Haskins & Sells offices. You can also obtain pamphlets from major brokerages such as Shearson Lehman Bros. and E.F. Hutton that outline the impact of tax reform on IRAs.

Retirement planning A traditional rule of thumb predicts that you will require 60% to 80% of your current pretax income to maintain your present life style after you retire. An easy way to calculate your retirement needs is to make use of basic worksheets and budgeting plans, which are available through most brokerage firms. The American Association of Retired Persons (AARP, P.O. Box 2240, Long Beach, Calif. 90801) publishes Take Charge of Your Money, which includes worksheets and explains strategies to help you make the most of your assets. If you own a home, for example, the booklet suggests sophisticated methods to increase your retirement income by using your home as collateral. Although the booklet was written before the 1986 tax act, many of its strategies are still valid and an updated version is likely to be available in January. For a more comprehensive post-tax-reform guide to retirement planning, Merrill Lynch offers the Retirement Builder program. The free booklet that goes with the plan (which is available from your nearest Merrill Lynch office) provides worksheets and strategies you should consider for income sources like Social Security, Individual Retirement Accounts and employer-sponsored retirement plans.

Financing an education Four years at a top private university can cost more than $50,000 today, while the tab can run as high as $20,000 at a public college. Marine Midland Bank's National Educational Lending Center (824 Market Street Mall, Suite 501, Wilmington, Del. 19801) publishes Staying on Top of the Bottom Line. This booklet offers advice on financial aid and budgeting as well as suggesting ways for students to avoid taking on large debts. Another excellent source is the U.S. Department of Education's The Student Guide -- Five Federal Financial-Aid Programs. This 60-page booklet explains eligibility requirements and application procedures for Pell Grants, Perkins Loans and Guaranteed Student Loans, as well as strategies for consolidating different loans. You can obtain this guide at no cost by writing to the U.S. Department of Education, Training and Dissemination Office, 400 Maryland Ave. S.W., Washington, D.C. 20202.