Four Things All Investors Should Know

1,520,000,000. That’s how many results you’ll get if you Google the word ‘investing.’

Wow! That’s a lot of information coming at you. But what information can you trust? What information is relevant to you? Where do you start to get your arms around what it means to invest?

We suggest you read on and learn about 4 time-tested core investing principles that can help you form a solid foundation, no matter the investment weather.

1. Start now!

I wish I’d waited a few more years to start investing (said no one, ever)! That’s because generally, the longer you have to invest, the better. You have time to wait out the markets ups and downs, and take advantage of the power of compounding, especially in a tax-advantaged retirement account, like a 401(k), 403(b), or IRA.

What waiting to invest can cost you

Check out the difference in what you could potentially earn by starting to invest early. Each of the investors below saved $100 (pre-tax) per month, but started 10 years apart. Here’s what each would have in their retirement accounts by age 65, if they’d earned 7% a year 1.

Compound Investing Chart

That’s the power of compounding in action.

Source: Bankrate Compound Interest Calculator Tool 2

2. Spread your risk.

Diversification can help reduce the investment risk your portfolio3. Here’s why: Let’s say the U.S. tech sector is on fire, so you put all your money into tech companies. If that sector takes a hit – so does your entire portfolio. By spreading your investments across different economic sectors, different companies, and even different countries, you can potentially reduce the risk of a downturn in your portfolio from any one sector.

Tip: You can check your FolioFirst account diversification profile right from your account dashboard. You can look at our Sample Portfolio, that's diversified across 10 different sectors.4

3. Invest like clockwork.

If you invest a set amount on a regular schedule and buy into the market at different times and prices – you’ll be able to buy more shares when prices are low, but you’ll end up buying fewer shares at higher prices. This approach is called “dollar-cost averaging."

Another tip: You can do the same thing with your FolioFirst account by linking it to your bank account and setting up recurring deposits. Then invest consistently into those companies you've identified as of interest.

4. Invest with your head.

Investing is a long-term proposition, and while you’re investing, the market will go up and down, and you might feel anxious. So make sure you have a plan in mind for when you hear “the "NASDAQ tumbles more than 2%,” so you can keep a cool head. Otherwise you might find yourself selling low and buying high.

You’re on your way!

OK. You got some knowledge. Why not log in to your account, visit the Trade Center and check out your options. Choose individual securities, or take a look at our Sample Portfolio.

Haven't created your FolioFirst account yet? Get started now!

Open an Account


[1] The performance return shown is hypothetical for illustration purposes only and does not reflect any specific investments or strategies. The calculation assumes that $100 is invested monthly starting at age 25, 35, 45, and compounded annually. Your actual investment results may be higher or lower and will generally be reduced by a number of factors including fees or expenses not reflected in this hypothetical calculation. Past performance is no guarantee of future results.

[2] The information provided is strictly as a courtesy. When you click on the link, you are leaving this site and viewing information provided by a third party. We make no representation as to the completeness or accuracy of information provided by any third-party website.

[3While a diversified portfolio can potentially reduce the level of risk in your portfolio, all investing involves risk, including risk of loss.

[4] This information and sample portfolios are intended to be educational and not tailored to the investment needs of any specific investor. As with all your investments, you must make your own determination whether an investment in any particular security or securities is consistent with your investment objectives, risk tolerance, financial situation and your evaluation of the security. Be sure to review your decisions periodically to make sure they are still consistent with your goals.