What do snooty rich guys know that you don’t? Besides the difference between a 1990 and ’91 St.-Emilion Bordeaux, they also know one simple secret—that you succeed at the money game using the same strategies that win tennis matches, earn promotions, and enable you to emerge unscathed from a “talk about where things stand” with your girlfriend:

• Avoid unforced errors;
• Never pass up the chance to earn an easy point;
and, above all:
• Never, ever substitute emotion for intelligent analysis.

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In fact, taking the easy way in makes a lot more sense than driving yourself nuts crunching numbers all night and obsessively managing your E*Trade account. Here are three somewhat counterintuitive money moves that will burnish your portfolio and pay off handsomely in your future. (You can use the proceeds to buy a nice bottle of 1990. The ’91 is vinegar.)

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The Unforced Error

Buying at Peak Price

Worth It: Timber
Not Worth It: Gold

Gold has been the trade of the (young) century until recently. Back when tech stocks were hot and George W. Bush was headed to the White House, an ounce of gold went for about $280. It passed $1,900 in 2011, then fell below $1,400. Doomsayers predict that, as central banks around the world keep printing money, gold will be the only thing that holds value. And maybe they’re right—it’s tempting to want to buy the dip. But Warren Buffett didn’t become the world’s second-richest man by investing in assets after they’d run up sixfold, and you probably won’t, either.

Instead of following the herd, consider an investment that some say is better protection against inflation, and hasn’t had such a run-up: timber. The smart money—pensions, college endowments—have been buying forestland for years. You may not be sitting on enough cash to buy yourself a forest, but you can buy shares of Plum Creek Timber (PLC). It pays a 3.3% yield, which compares nicely with gold’s 0% payout. Plum Creek has had a good run lately, but has only doubled since Y2K.

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Gold is a fear trade. Timber is a growth trade. Construction dried up in the wake of the housing bubble, but home builders are finally swinging hammers again, and that’s already boosting the need for wood. Demand from Asia is also strong. Sure, there could be another downturn, and, like any investment, shares of Plum Creek could drop. But unlike gold, trees keep growing, so the intrinsic value of your investment increases till it’s time to harvest. And in the meantime, you collect 3.3% a year, compounding.

In some ways, timber is the perfect investment. There are no huge deposits of trees that might be discovered, lowering the price of existing trees. In fact, warming temperatures are allowing the forest-destroying pine beetle to decimate woodlands in British Columbia, crimping supply and putting upward pressure on prices. And, unlike a hot energy play, a timber investment won't have you worrying about the tree well drying up.

Bonus: Plum Creek is a real estate investment trust, or REIT; but unlike most REITs, its payout is treated as a capital gain rather than ordinary income, so the taxes are lower if you're in the 25% tax bracket (income exceeding $36,000) or above.

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The Unforced Error

Paying High Fees

Worth It: Low-cost Index Fund
Not Worth It: Hot Mutual Fund

You probably keep tabs on your monthly expenses. But do you have any idea how much you're paying to invest? All those mutual funds in brokerage accounts and 401(k)’s come with a price tag—but it’s a price most people ignore. It’s called the “expense ratio,” and it generally varies from less than 0.1% to about 1.5%. Here’s a secret the financial industry doesn’t want you to know: The cheaper the fund, the better it is.

How great is that? With German cars and Swiss watches, you pay more to get more. You may consider Porsches overpriced, but would you rather be taking on the switchbacks of the Italian Alps in a Pontiac Aztek? With mutual funds, however, it’s the opposite. Stacks of academic studies have found that you’ll weather the twists and turns of the market better with a dirt-cheap index fund than with an actively managed high-priced fund run by stock pickers who try to beat the market.

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Some guys spend hours analyzing mutual funds, certain that if they work hard enough, they’ll gain an edge. It’s a natural impulse—and it’s entirely wrong. There’s no more accurate predictor of a fund’s performance than its cost: The lower the cost, the better it’ll do. A study by Morningstar grouped funds into five categories, from most to least expensive. The cheap funds outperformed the most expensive ones 100% of the time. In short, you’re better off wagering that the Cubs will win the World Series than that your high-priced-fund manager will outperform the S&P 500 over the long term.

Here’s the math: The average stock mutual fund charges about 1.3%, or $13 for every $1,000 invested. Doesn’t sound like much, but compare that with a bargain-basement fund charging 0.7%, or $.70 for every $1,000. If at age 30 you invested $100,000 in the more expensive fund and earned 8% a year, at age 65 you’d have $935,258. Invest the same amount in the cheap fund at the same 8%, and at 65 you’d have $1,442,738. The difference would put six Porsche 911s in your garage.

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The Unforced Error

Letting Your Money Gather Moss

Worth It: Long-term CDs
Not Worth It: Savings Account

It may be a first in the history of finance: a way to use the fine print to your advantage. Perhaps you’re looking to buy a house in the next few years, or maybe you’re saving up for that much-needed sabbatical in Tahiti. While the stock market may look like a good investment for the long run, stocks feel a little risky when it comes to funds you may need to tap in the near future. The alternatives, however, are ugly. Banks are paying why-even-bother levels of interest, so your cash is dead money in a savings account. Park $10,000 in a bank’s average money market for a year and you’ll earn a whopping $16.

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The solution, courtesy of Colorado financial adviser Allan Roth: Take that $10K and buy a five- or seven-year certificate of deposit (CD) with a small early-withdrawal penalty. Roth recommends Ally Bank’s five-year CD, which yields 1.53%. At first glance, you might reject it, seeing that your money will be locked up until 2018. But, in fact, you can pull your money out early and pay just a small penalty (two months’ interest). So even if you cut and run after a year, you’ll still pocket $125. Hold the CD until maturity, and you’ll earn nearly $800.

Even if you don’t follow these strategies exactly, you’ll build wealth faster just by heeding these lessons: Don’t follow the herd into a “hot” investment; control what you can, costwise; and don’t try to outsmart the market. And if a free lunch does come along—eat.

 

Jack Otter is editor of barrons.com and the author of Worth It...Not Worth It? Simple & Profitable Answers to Life's Tough Financial Questions.