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How to Invest

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How to Invest

Now that you’re ready to move from saving to investing, Schwab can help you learn how to invest money, stay on track—and reach your long-term goals.

Top Questions on How to Invest Money

To get started, let your goals be your guide. First you must ask yourself key questions: What is my purpose for investing? What do I plan to do with the money I earn? When will I need it?
Generally, sooner is better. History has shown that the longer you've been invested, the less impact the short-term ups and downs of the market will have on your overall return. So the earlier you invest, the longer your money has time to gain from market upturns, recover from downturns—and build on market returns through compounding.
How much you invest really depends on your goals and time horizon. But a good rule of thumb is to invest the maximum you can comfortably afford (after accounting for paying off debt, daily living expenses, and any prioritized short-term savings goals). By investing even a little bit on a regular basis, over time you can reap big benefits as the potential returns from your original investments are reinvested and add to your portfolio through compounding.
Savings accounts are often seen as the ultimate "safe" place to put your money. But keep in mind that they can be affected by economic and market forces. In fact, savings rates haven't even kept up with the rate of inflation in recent years, which means that if you put all your cash in savings alone, you could end up losing purchasing power over time.

To manage investment risk, we recommend including a mix of different types of investments. Spreading your money across various investment types helps balance your exposure to risk for the long term.
We believe the best way to offset investment risk is to allocate your money across asset classes. The three main asset classes are stocks, bonds, and cash.

And just as you allocate your investments across the above classes, you will also want to consider dividing, or diversifying, your investments within each asset class. This involves spreading your money across different sectors, industries, regions, and companies in the hope that if one investment loses money, the other investments will offset those losses. Historically, different types of investments have reacted differently to market cycles and interest rate changes, so combining them can help reduce overall portfolio risk. If one asset dips in value, another may remain stable or even rise, potentially buffering the high and low swings in the overall value of your portfolio.
We believe that is the key to a long-term investment strategy. Over time, the markets will go up and down, and different investments may react differently. So it's important that you spread your money (and risk) across different types of investments, such as stocks, bonds, and cash. By including a mix of investments from across asset classes, market segments, and industries, you can potentially gain greater opportunities with less downside risk.
Determining the risk of any investment can be a complex process. You must take a variety of factors into account, such as the type of investment and the fluctuations in the market. Before you decide on your investment mix, consider consulting with an investment professional who can help you build a portfolio that suits your risk tolerance and time horizon.
The rate of return on an investment simply refers to the rate of a gain or loss over a specified period (usually a quarter or a year). Keep in mind that past performance does not indicate or guarantee future results, and it is possible to lose money while investing.
Yes, there is no set investing limit to get help from Schwab. Whether you have a little or a lot, we can help you get started on the right track. Note that to open a Schwab One® Brokerage Account or Schwab Individual Retirement Account (IRA) you must have a minimum of $1,000. The minimum is waived if you set up an automatic monthly transfer of $100 through direct deposit or Schwab MoneyLink®, or if you open a Schwab Bank High Yield Investor Checking® account linked to your brokerage account. To speak with a Schwab investment professional, call 800-435-4000 anytime, or find a Schwab branch near you.


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