7 Investing Principles

Source: Schwab Modern Wealth Survey. The online survey was conducted March 1–13, 2023, in partnership with Logica Research among a national sample of Americans aged 21 to 75. Survey sample size was 1000.

Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here 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 decision.

Data contained herein from third-party providers is obtained from what are considered reliable sources. However, it's accuracy, completeness, or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

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

Source: Schwab Center for Financial Research with data from Morningstar. Invested in a hypothetical portfolio that tracks the S&P 500^® index from January 1, 2004 to December 31, 2023 for Maria, and from January 1, 2014 to December 31, 2023 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 12.03%; Maria's is 9.69%. The actual rate of return will fluctuate with market conditions. Past performance is no indication of future results.

Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly.

Source: Schwab Center for Financial Research with data from Morningstar. The year begins on the first trading day in January and ends on the last trading day of December, and daily total returns were used. Returns assume reinvestment of dividends. Fees and expenses would lower returns. When out of the market, cash is not invested. Market returns are represented by the S&P 500 index, an index of widely traded stocks. Top days are defined as the best performing days of the S&P 500 during 2023. This chart represents a hypothetical investment and is for illustrative purposes only. Past performance is no indication of future results.

Source: Schwab Center for Financial Research with data from Morningstar. In the tax-deferred hypothetical scenario, $3,000 is invested in a hypothetical portfolio that tracks the S&P 500 index every year for 10 years, then nothing is invested for the next 10 years. The account earns capital appreciation and dividends. Dividends are assumed to be reinvested when received. Maria makes a lump-sum withdrawal in year 20, when she is in the 24% marginal tax bracket. In the taxable scenario, Maria is in the 24% marginal tax bracket and after taxes invests $2,250 in a hypothetical portfolio that tracks the S&P 500 index every year for 10 years. She invests nothing for the next 10 years, leaving her money fully invested. The account earns dividends, which are taxed at 15%, and recognizes capital gains every five years, which are taxed at 15% with net proceeds reinvested. Performance is based on historical returns of the S&P 500 from January 1, 2004 to December 31, 2023. This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.

Source: Schwab Center for Financial Research with data provided by Morningstar. The 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. Past performance is no indication of future results. Indexes are unmanaged, do not incur fees and expenses, and cannot be invested in directly. This chart is for illustrative purposes only.

Source: Schwab Center for Financial Research with data from Morningstar. The 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.