Schwab Outlines Tips for Investors

Markets May Fluctuate but the Staples of a Financial Portfolio Should Not

Tuesday, October 6, 2009 5:01 am PDT



Public Company Information:


SAN FRANCISCO--(BUSINESS WIRE)--Charles Schwab today released a series of financial planning and investing tips to help individual investors better manage their finances and investing plans as global markets rebound and the economy begins to recover.

“The past year has been a tough one for the economy at large, but investors are once again proving resilient and pursuing their investment strategies,” notes Liz Ann Sonders, senior vice president and chief investment strategist at Charles Schwab. “As we’ve learned from previous downturns, investors do get their feet back under them and appropriately invest again. Our job is to help them take stock of their investment strategy and make informed choices consistent with their goals.”

  • Know yourself and know your risk tolerance – One of the lessons learned in the past year is that many investors thought they had a higher tolerance for risk than they actually did and panicked when their portfolios started losing money – in many cases, more quickly and dramatically than they had anticipated. Because money is an emotional subject and emotions can often lead us in the wrong direction, there are few things more important than knowing yourself as an investor. That means examining your attitude toward risk –understanding the potential for seeing your investments lose value and how you might react in various situations.
  • Develop a plan and stick to it – If you don’t already have one, you should develop a strategy for investing. Jumping in and out of the market is not an investment strategy. Ever since the market rebound began to take shape in March, many investors have talked repeatedly about missing a moment in time to get back in the market. We encourage our investing clients against trying to “time” the market and urge them to take a longer-term view and a more holistic approach to investing and saving. Dollar-cost averaging can be a simple way to ease into investing in the stock market. You will also want to think about how to diversify your portfolios – based on both your particular investment goals and risk tolerance – and should use an appropriate asset allocation among various investment vehicles.
  • Know when to hit the rebalance button If you have assessed your risk tolerance, set a plan and developed your goals for investing, you will want to reassess at least once a year to see whether your portfolio is on track with your goals. If it’s not, you may need to change the allocation of investments across asset classes. Rebalancing is all part of prudent portfolio management and maintenance.
  • Maximize retirement savings – Employers with 401(k)s or similar retirement savings plans are essentially paying their employees to save. If you are not contributing up to your company’s maximum match, you’re leaving money on the table. Even if money is tight and you have multiple priorities, you should make this your top priority – at least up to the company match – and then consider making adjustments to set aside more each month when you can. To learn how real people saved for retirement got to
  • Educate yourself – Many Americans have expressed concern that they don’t know enough about their finances and hadn’t thought a whole lot about saving and investing during the boom times – which becomes painfully obvious at the lows. The economic downturn has sparked a greater demand for investor education. Beyond seeking budgeting and smart saving guidance, investors are also interested in a better understanding of the economy and the stock market. The impetus has also been placed on families and schools to institute better money management at a younger age. A few great resources for information are and
  • Recovering from market losses takes time – While it’s impossible to know how long it will take for your portfolio to recover, hibernating in low-to-no-risk funds – or keeping a large allocation in cash – is not a smart way to rebuild value. This bear market showed a waterfall decline of 57 percent, yet in March, it turned on a dime—climbing 58 percent in six months. Many investors missed this rally and others may miss the next by parking a majority of their portfolio in accounts that don’t offer much upside potential for gains. You should consider your risk tolerance while revisiting your long-term portfolio goals and target asset allocation. Realizing that rebuilding a portfolio’s value will take time and that there may be some more dips along the way is a big hurdle for some, but it’s the mantra of smart, long-term investing.
  • Frugal is the new black – The current economic environment has had a large impact on the average family. Households are saving more and working to decrease their debt. This movement has ushered in a new era of personal finance in which frugality is in vogue and the value of a dollar is better understood. This new respect for personal financial fitness is a good thing and was, perhaps, a long time in the making, as many Americans went through a prolonged period of leveraging up – borrowing more than they earned and/or could repay. Moving forward, it is ever more important to practice good budgeting and financial planning habits. Useful tools are often available free of charge from many financial institutions or on many Web sites. Schwab’s offers various tools and calculators – all free.
  • Save for the right home – Investors are learning the importance of buying homes within their means. To help estimate the amount needed for a down payment, you should be aware of the approximate purchase price and what type of monthly mortgage payments you can afford. The general rule is to pay no more than 28 percent of your gross income on principal, interest, property taxes and insurance. Tools and calculators are available to help guide buyers. Schwab offers several such resources at

The Schwab Center for Financial Research

The Schwab Center for Financial Research (SCFR), a division of Charles Schwab, provides individual investors with quality research and decision-making tools, including Schwab Equity Ratings® and the Mutual Fund OneSource Select List®. Schwab’s experts are published in respected business and academic journals and regularly cited by the media on investing issues. SCFR delivers objective, fact-based analysis of key investing topics, including the markets, the economy, retirement, portfolio management, investment strategy and financial planning. Schwab’s insightful perspective and practical advice help clients make better investment decisions.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.6 million client brokerage accounts, 1.5 million corporate retirement plan participants, 646,000 banking accounts, and $1.3 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at (1009-11178)


Charles Schwab
David Weiskopf, 415-636-3700
Pablo Rodriguez, 415-486-3267

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