(MONEY Magazine) – If there ever was a time for savers to brave the rite of passage to becoming investors, 1993 is it. True, a recovering economy may nudge the recent 2.8% to 5.4% yields on savings accounts and CDs up a full percentage point in the coming year. But let's face it. Hunkering down in a 6% CD won't put you in the fast lane to achieving your financial goals. ''To build wealth and keep ahead of inflation,'' says Michael Martin, author of the forthcoming Life After CDs (Dearborn, $19.95), ''you've got to venture outside the bank and invest in stocks, bonds and mutual funds.'' Moreover, don't put off investing because of MONEY's forecast that stocks may rise a relatively meager 5% or so next year (see ''Where to Put Your Money in 1993,'' page 56). Historically, stocks have averaged annual returns of about 10%. Here's what those high-powered gains could mean to you. Let's say you can afford to sock away $300 a month to help send your eight-year-old to Princeton in 2002. With stocks, you could count on accumulating about $52,150 by that time, after taxes. But stashing the same amount each month into CDs paying 5% a year would raise just $43,250, or 17% less. Unfortunately, no one knows this math better than the slick financial pitchmen who prey on novice investors. In fact, with a new President about to take over in Washington, this is a time to be especially wary of unsolicited (or cold) calls from brokers. They are urging people across the country to ''buy Clinton portfolios now!'' Of course, the brokers don't point out that prices of the infrastructure or eco-play stocks they're promoting all ran up weeks before the election in anticipation of Clinton's victory and are unlikely to keep rising at that pace. Result: The commission-earning broker, not you, will profit most from what amounts to self-serving advice. To help you avoid getting bushwhacked (or is it Clinton-whacked?) by poor investments and lousy advice, MONEY has assembled the following seven rules of successful investing. Our goal: to give you the realistic advice you need to get started investing properly. (If you think you already know the basics of investing, don't skip this story without first trying your hand at our investing IQ test on page 71. It could serve as a quick check on how much you really understand.) No. 1: Choose the proper mix of assets to reach your financial goals before buying any investment. A truly savvy investor buys only securities that fit a well-thought-out portfolio divided among three basic asset categories: stocks (or stock funds), bonds (or bond funds) and cash investments such as money- market funds, savings accounts or CDs. That way, when one part of your holdings gets hammered -- stocks, for example, can sometimes drop 25% in a year -- the other parts will keep chugging along. What's the right mix? Ignore advisers who say the correct combo depends mostly on your age. (An exception to this rule: investing for retirement in accounts such as 401(k)s; for more about them, see page 106.) What really matters is how soon you will need the money. The longer that time period, the more you should favor stocks. Roger Gibson, a Pittsburgh investment adviser and asset-allocation expert, recommends that if your goal is, for example, accumulating a down payment on a house in five years, divide your portfolio this way: 35% in stocks or stock funds, 20% in bonds or bond funds and 45% in cash. For a child's college tuition in 10 years, the proper blend would be 50% stocks, 20% bonds and 30% cash. And if your time horizon is 20 years or longer -- say, you're investing for retirement -- the mix would be 65% stocks, 20% bonds and 15% cash. After setting your mix, leave it alone except to re-balance the components once a year by switching profits from the parts of your portfolio that have done well to those that haven't. No. 2: Start out with mutual funds. Even if a first-timer is willing to spend the time to select and monitor individual securities, he or she is unlikely to do as well as a full-time mutual fund manager -- and thus is better off in funds. (Exception: If you want to invest in U.S. Treasury notes or bonds, you don't really need professional management. You can buy the securities directly from the Treasury for no fee -- your bank can tell you how to get the right forms -- or for $30 to $50 a bank or broker can purchase Treasuries for you.) If, like many novices, you don't have the $10,000 or more necessary for a portfolio of funds, you can start by putting $1,000 or so into a conservative growth or growth and income stock fund. As you amass more money, you can gradually add other types of funds. Ultimately you should aim for five to seven, including stock funds from the growth, growth and income and equity income categories, as well as corporate or municipal bond funds and money- market funds. After you've assembled your basic portfolio, you might put 10% or so of your equity money in an international stock fund. If you want higher returns and can tolerate more risk, buy a small-company growth fund. Though these volatile funds can outperform their large-company counterparts by 10% or more over several years, they can also crash 20% or more in a bear market. By limiting them to about 10% of your overall holdings, however, in a bad market you'd drag your entire portfolio down by just 2%. (For mutual fund recommendations, see ''Five Who Can Lead the Pack'' on page 82.) No. 3: Educate yourself about how investments and the markets work. To invest wisely, familiarize yourself with the most common financial terms. Three key terms and their definitions: dividend yield (the annual dividends paid by a stock or a mutual fund divided by the price per share of the security); total return (a performance measure that includes dividends as well as price changes in a stock or fund) and net asset value (the value of a share of a mutual fund). For more fundamentals, read The Basics of Investing by Gerald Krefetz (Dearborn, $16.95) and The Individual Investor's Guide to No- Load Mutual Funds (International, $24.95; free with a $49 membership in the American Association of Individual Investors, 312-280-0170). No. 4: If you want personal advice, find a knowledgeable and trustworthy broker or financial planner. Ask your friends, your tax accountant or your lawyer for the names of brokers or planners they've worked with successfully for three or more years. This should eliminate rip-off artists. Interview at least three candidates to assure that their investment philosophies jibe with yours. Before signing on with your top choice, check whether he or she has a disciplinary record with your state securities regulator. You can get the phone number from the North American Securities Administrators Association (202-737-0900). David Sherman, 34, of New Hope, Minn., pictured on page 66, chose Pete Levy of Piper Jaffray two years ago when Levy's name came up often among Sherman's friends and business associates. ''When I met him I found we shared ideas about investing,'' says Sherman, noting they agreed on the importance of first-hand knowledge of a company before buying its stock. Since becoming Levy's client, his investments have gained 30%. No. 5: Adopt a Scrooge-like approach toward fund expenses. In the '80s when stocks gained 17.3% a year on average, few investors cared about surrendering 0.5% to 1% of their annual returns in management fees. But with stock prices likely to increase just 5% in 1993, San Francisco-based investment adviser Kurt Brouwer notes that ''giving up a percentage point is like trying to swim with a big weight around your neck.'' Be wary of any fund whose expense ratio -- the cost of running the fund expressed as a percentage of assets -- far exceeds that of similar funds. (The average: 1.5% for stock funds and 0.9% for bond funds.) MONEY's August 1992 issue listed expense ratios and projections for 160 top funds. Unless you demand professional fund-picking advice, you can save a chunk of money by buying only no-loads or low-loads -- funds with no initial sales fees or ones that are less than 4% of the amount you invest. The savings you'd reap on $10,000 in a no-load rather than a fund with an 8.5% initial sales fee: $850. No. 6: Go for consistency rather than flashy returns. Too often, last year's success story is this year's also-ran. For example, the Oppenheimer Global Bio-Tech Fund topped the performance charts in 1991 with a mammoth 121% return. But that gain was largely due to the run-up in medical technology stocks, which tanked in 1992, dragging the fund down 31.9% through Nov. 1. Instead of putting money in the latest No. 1 fund, choose portfolios that have regularly outperformed competitors with similar objectives for three to five years. Says Sheldon Jacobs, editor of The Handbook for No-Load Investors ($49; 800-252-2042): ''If you can find a fund that is consistently in the top 40% or so of all funds of the same type, you're doing well.'' Five that pass the test (average annual returns are for the five years to Nov. 1): SteinRoe Special (800-338-2550), up 18.4%, vs. 13.7% for the average growth fund; Neuberger & Berman Guardian (800-877-9700), up 16.6%, vs. 12.2% for the average growth and income fund; Skyline Special Equities (800-458-5222), up 21.6%, vs. 15.9% for the average small-stock fund; Vanguard Short-Term Corporate (800-662-7447), now yielding 5.7%; and Columbia Fixed Income Securities (800-547-1707), an intermediate-term corporate bond fund yielding 6.8%. No. 7: Never invest in anything you don't understand. Tyros and veterans alike frequently throw money into faddish securities without knowing the risks. Since 1991, for example, more than 750,000 shareholders have poured nearly $15 billion into global short-term income funds, which invest in the debt of foreign countries. ''In many cases these funds were touted as safe CD alternatives yielding around 9.5%,'' says Lori Lucas, a contributing editor with the Morningstar Mutual Funds advisory service. But when the European currency markets unraveled last September, some of the funds lost as much as 10.4% of their value in a few weeks. Of course, no set of guidelines can guarantee phenomenal gains or ensure that you won't occasionally make mistakes. If you follow our seven rules, however, at the very least you will tip the odds in your favor.