There are many investment risks you might face when growing your money.
Learn the basic principles of investing.
Explore ways to manage financial risks and reach your long-term goals for a secure future. This includes learning how to balance risks before, during and after retirement.
Plan for a secure future.
Start your journey with 6 key investing principles.
Join Sally in this short video as she walks you through 6 key investing tips for a successful financial future.
The 6 Principles of Investing
Video Duration: 1 minute 43 seconds
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Knowing the basics of investing can help you prepare financially for the future.
Take Sally, who's starting her career. She decides to follow six investing principles as she works toward her goals.
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Number one, start early.
The first principle that Sally follows is to start saving early. She begins investing for retirement early in her career by making saving part of her monthly budget. By doing this, she's giving her money more time to grow.
Number two, start small.
Sally saves what she can. She wants to build up to saving 10% of her income for retirement. This amount includes her company's matching contributions.
Number three, stay committed.
Realizing it takes time to grow money, Sally saves consistently. During her financial journey, she learns about services like automated investing. When needed, she also seeks guidance from a financial advisor.
Number four, diversify investments.
To help protect her money, Sally selects different types of investments. She recognizes the risk of investing heavily in one company.
Number five, consider timeframes.
When investing, Sally thinks about when her money might be needed. This helps her determine the amount of risk she's willing to take.
Number six, stay calm when the market is not.
Sally stays focused on her long-term goals when the market is unpredictable. She keeps her emotions in check and reviews her investment plan before responding to market changes.
Are you like Sally and ready to buy stocks or save for retirement? As you invest for your future, our two trusted investment providers can offer a variety of options.
Description of visual information: [ Investments/Insurance: Not a Deposit • Not FDIC Insured • Not Bank Issued, Guaranteed or Underwritten • May Lose Value
Investing involves risk, including potential loss of principal.
Past performance is no guarantee of future results.
USAA and its affiliates do not provide tax advice. Taxpayers should seek advice based upon their own particular circumstances from an independent tax advisor.
Diversification, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses.
USAA Investment Services Company (ISCO), a registered broker-dealer and a registered investment adviser, provides referral and marketing services on behalf of Charles Schwab & Co., Inc. (Schwab), a dually registered investment adviser and broker-dealer. Schwab compensates ISCO for these services.] End of description
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Apply 6 basic investing principles.
Follow Sally as she navigates the essential steps of investing as a recent college graduate.
As you start and continue on your investing journey, take charge of your financial future by keeping these principles in mind.
Sally remembers something a financial expert once told her: Starting to invest early can really boost your retirement savings.
If she saves $500 a month starting at age 22, she could end up with over $1 million by the time she retires at age 65.
If she waits until age 42, she could only reach about $282,000.
These scenarios assume a hypothetical 6% annual return through age 65. Sally’s potential retirement savings are much higher if she starts in her 20s instead of waiting until her 40s or 50s. This is the power of compound interest and the . These hypothetical numbers are not an indication of the returns of any product.
Time value of money
This is a financial concept that means money available now is worth more than the same amount of money would be in the future because of potential growth.
Inspired by a podcast discussing financial habits, Sally commits to saving at least 10% of her income. She learns that even beginning with $100 a month is better than nothing, especially with her employer’s matching contribution.
This sets her up for future growth without straining her budget.
If Sally is a military member, she might be enrolled in the Blended Retirement System (BRS). With BRS, she's eligible for a 5% matching contribution from the government if she contributes at least 5% of her basic pay to a Thrift Savings Plan account.
It would match her initial goal of saving at least 10% of her income.
To maintain her savings discipline, Sally creates a budget based on principles from a popular financial book emphasizing the importance of prioritizing savings.
If she feels overwhelmed, she plans to use a robo-advisor. She can also consult a financial professional for guidance. This helps make sure she stays focused on her long-term goals through financial planning.
Sally reads an article that helps her understand the importance of diversification. So she spreads her investments across different asset classes.
She chooses to allocate 50% to stocks and 50% to bonds, balancing potential growth with stability. This strategy helps protect her hard-earned money.
To reduce her risk, Sally often looks at or mutual funds. If she invests $1,000 in a mutual fund, her money could be spread across thousands of companies, depending on the fund’s portfolio.
To make sure the fund matches her strategy and goals, Sally also reads the fund prospectus, which gives her details about the fund's investment objectives, risks and more.
Exchange-traded funds
This is a collection of stocks, bonds and other securities that tracks different sectors or indexes to offer diverse investing. Similar to an individual stock, it's traded on an exchange where prices fluctuate throughout the day.
As Sally plans a vacation in 3 years, she remembers some advice about matching investments to milestones.
To keep her funds safe for the trip, she decides to go with a high-yield savings account instead of riskier stock investments. That helps her make sure her money is accessible when needed.
According to a study on the performance of the stock market over the past 20 years, if someone stayed fully invested, they would earn a 9.95% annual return. But the investor's return dropped to 5.59% if they missed just the 10 best days of the market during this same 20-year period. If they missed the 20 best days, their return decreased to 2.84%.
Could Sally accurately guess the 20 best trading days out of more than 5,000 in a 20-year period? Probably not. That's why managing emotions is an important part of a long-term investing strategy. If Sally is nervous about market volatility, she can revisit her plan to ensure it reflects her risk tolerance and financial goals.
Source: J.P. Morgan Asset Management: Guide to Retirement. 2025 Edition
Invest with confidence.
As you start and continue on your investing journey, it can be helpful to keep these basic investing principles in mind. Like Sally, you could make decisions that match your risk tolerance and savings goals.
Building a path to retirement
Follow along one couple’s journey in retirement.
Liz and Hector are a recently retired couple. They dream of travel, family time and hobbies. But they realize their Social Security and pension won’t be enough to make it happen. They’ll need to rely on their investment accounts and the continued growth of them.
By understanding key investment risks and making their savings work harder, they can plan for the secure retirement they want.
Financial and lifestyle solutions
After learning about investing risks, Hector and Liz have identified some financial and lifestyle solutions that work for them. They’ll:
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Keep cash on hand for short-term needs or emergencies.
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Pay off their mortgage or use a reverse mortgage to free up their income.
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Downsize their home or relocate to an area with a lower cost of living.
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Choose investments that are appropriate for their ages.
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Diversify their investments and buy inflation-protected securities like bonds.
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Include all their assets, like pensions and Social Security benefits, when planning.
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Delay the start of their retirement by claiming Social Security benefits later.
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Dedicate some assets to create guaranteed income for immediate or future use.
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Reduce their gifting and legacy goals or use life insurance to fund legacy wishes.
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Reduce expenses when possible, especially for non-essential items like entertainment.
Creating an investment plan
Realizing they only get one chance to get retirement right, Liz and Hector make an investment plan that's best suited for their situation.
They get help developing the plan and ask for guidance before making critical retirement decisions. The 2 retirees also seek legal and tax assistance when needed, along with retirement and financial planning advice.
Take steps toward your own retirement.
Steps to complete Take steps toward your own retirement.
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