December 2, 2022

In my position as a Charles Schwab Independent Branch Leader in Southern Pines, I am fortunate to work with many retirees who have come to the area to enjoy the fruits of their labor.

Although they have diverse backgrounds and different ways in which they accumulated their nest eggs, they all followed several tried-and-true investing principles. I believe those who are starting their investing journey can follow these guiding principles to achieve their goals. With my clients, I talk about these seven principles that are key to successful investing:

1. Establish a financial plan based on your goals.

Many of us have several financial goals — saving for retirement, a college education and a home being a few. The first step to making progress toward those goals is creating a plan to reach them.

According to Schwab’s 2019 Modern Wealth Survey, more than 60 percent of Americans who have a written financial plan feel financially stable, while only a third of those without a plan feel that same level of comfort.

2. Start now.

Building wealth is a long-term endeavor and for long-term investors, time in the market is more important than attempting to time the market. Your level of savings is the biggest factor in determining whether you can meet your financial goals; and the earlier you start saving and investing, the more time your contributions have to potentially grow, thanks to the power of compounding.

3. Build a diversified portfolio based on your tolerance for risk.

Allocate your money across asset classes, such as stocks, bonds and cash investments, and within each asset class, across different sectors and geographies. To determine what allocation mix is right for you, it’s important to understand your tolerance for potential losses, which is dependent on your time horizon and comfort with volatility.

For example, if you have a mortgage, your own business and kids approaching college, you may be less likely to ride out a bear market — given your income needs — than if you are single and not holding major debt.

4. Minimize fees and taxes.

Markets can be unpredictable, so control what you know, such as investing fees. A seemingly small difference in fees can potentially make a big difference over time. Regularly review your statement and ask your financial advisor directly about the fees you are paying, why you’re paying them and how they are impacting your returns and progress toward financial goals. It’s important to always consider tax-efficient investing strategies, such as tax-loss harvesting, which may allow you to offset taxable investment gains with taxable investment losses, lowering your current tax bill and leaving you with more money to invest and potentially grow.

5. Build in protection against significant losses.

If you experienced the tech bubble burst in 2000 or the 2008 financial crisis as an investor, you know it can take years to recover — emotionally and in your portfolio. Holding cash and other defensive assets like bonds to hedge your portfolio can help provide stability and counteract big stock declines.

6. Rebalance your portfolio regularly.

Forgetting to rebalance is like letting the current steer your boat — you’ll likely end up off course. Keep your portfolio aligned with your goals and risk tolerance. Letting asset classes “drift” can eventually expose your portfolio to a level of risk that feels uncomfortable, and could cause you to make knee-jerk, and potentially costly, decisions.

7. Ignore the noise.

Markets will always fluctuate in the short-term, but whether they’re moving up or down, long-term investors should ignore the noise. Instead, stay focused on making progress toward your goals and stick to your financial plan.

Following these basic principles coupled with having a long-term financial investment plan allows for reason and proactive planning to dictate your financial future and not the moment-by-moment emotion that can be caused by market dynamics.

Philip Bailey is an Independent Branch Leader at Charles Schwab with over 18 years of experience helping clients achieve their financial goals. For more information visit the Southern Pines Independent Branch website at or call (910) 684-4965.

Schwab offers many tools and resources to help investors take charge of their financial futures. Some content provided here has been compiled from previously published articles authored by various parties at Schwab. 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 situation before making any investment decision.

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

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 advisor, or investment manager.