Seven Principles of Investing

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Supporting documentation for any claims or statistical information is available upon request.

For illustrative purpose(s) only. Individual situations will vary. Not intended to be reflective of results you can expect to achieve.

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Investing involves risk, including loss of principal.

Past performance is no guarantee of future results.

Diversification and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.

¹Invested in a hypothetical portfolio that tracks the S&P 500^® index from January 1, 2005 to December 31, 2024 for Maria, and from January 1, 2015 to December 31, 2024 for Ana. The end amount includes capital appreciation and dividends. Dividends are assumed to be reinvested when received. Fees and expenses would lower returns. Ana's average annual rate of return is 13.10%; Maria's is 10.35%. The actual rate of return will fluctuate with market conditions.

²The indexes used are: S&P 500 (large-cap equity), Russell 2000^® (small-cap equity), MSCI EAFE^® Net of Taxes (international equity), Bloomberg U.S. Aggregate Bond Index (fixed income), and FTSE U.S. 3-Month Treasury Bill Index (cash equivalents). The Moderate Allocation is 35% large-cap equity, 10% small-cap equity, 15% international equity, 35% fixed income, and 5% cash, using the indexes noted. Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly.

³The hypothetical investor invests $3,000 on the first day of January of every year for 10 years. Returns are assessed a fee at year-end. The hypothetical portfolio tracks the S&P 500 index from January 1, 2005 to December 31, 2024, with $3,000 in annual contributions invested for just the first 10 years. In scenarios involving fees, those fees are paid annually each year. Chart does not take into account the effects of any possible taxes.

⁴Stocks are represented by total annual returns of the S&P 500 index, and bonds are represented by total annual returns of the Bloomberg U.S. Aggregate Bond Index. The 60/40 portfolio is a hypothetical portfolio consisting of 60% S&P 500 index stocks and 40% Bloomberg U.S. Aggregate Bond Index bonds. The portfolio is rebalanced annually. Returns include reinvestment of dividends, interest, and capital gains. Fees and expenses would lower returns. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

⁵The three periods were selected to show how defensive asset classes performed when U.S. stocks decrease by more than 20% annually in the 20-year time period from 2002 to 2023. Indexes representing each asset class are S&P 500 TR Index (US stocks), FTSE U.S. 3-Month Treasury Bill Index, Bloomberg US Treasury 3-7 Year TR Index (treasuries), S&P GSCI Precious Metal TR Index (precious metals), and Bloomberg Global Aggregate Ex-US Bond TR Hedged Index (international bonds). Returns assume reinvestment of dividends and interest. Fees and expenses would lower returns. International investing may involve greater risk than U.S. investments due to currency fluctuations, unforeseen political and economic events, and legal and regulatory structures in foreign countries. Such circumstances can potentially result in loss of principal.

⁶The hypothetical portfolio above is composed of 50% stocks and 50% bonds on December 31, 2009 and is not rebalanced through December 31, 2021. Asset class allocations are derived from a weighted average of the total monthly returns of indexes representing each asset class. The indexes representing the asset classes are the S&P 500 index (stocks) and the Bloomberg U.S. Aggregate Bond Index (bonds). Returns assume reinvestment of dividends and interest. Indexes are unmanaged, do not incur fees and expenses, and cannot be invested in directly. Rebalancing may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events may be created that may increase your tax liability. Rebalancing a portfolio cannot ensure a profit or protect against a loss in any given market environment.

⁷Indexes are unmanaged, do not incur fees and expenses, and cannot be invested in directly. This hypothetical example is only for illustrative purposes.

The S&P 500^® is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by Charles Schwab & Co., Inc. Standard & Poor’s^® and S&P^® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). Charles Schwab & Co., Inc. is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.