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Investing Basics

Resources: Investing Basics

You want to invest wisely. A good place to start is with a review of investing fundamentals and the elements that contribute to building the portfolio that will best meet your individual needs. Click the links below for more detail on any of the concepts.

Types of Investments - Mutual funds, stocks, bonds (corporate and government), and cash equivalents are some of the financial instruments that can help you meet your financial goals. But like any other type of tool, some may be better suited for a particular job than others. Picking the right combination is essential.

Compounding - Albert Einstein considered compounding one of nature's most powerful forces. Learn how compounding interest works and how it can turn a small amount of money into a larger one.

Dollar Cost Averaging - Dollar cost averaging can lower your overall cost of investing, while at the same time getting your money working for you in the market. It's a simple approach and a great basic way to fund investments, but one that requires discipline. Note: Dollar cost averaging does not ensure a profit or protect against a loss in declining markets, and you should consider your ability to continue investing during low price levels.

Volatility - Markets move up and down with differing speeds and in different directions based on fundamental and emotional factors. Learn about volatility and how to avoid letting it derail your long-term goals.

Risk - All investment vehicles carry a risk. When assets with different types of risk are put together into a portfolio, assets with higher levels of risk can help balance those with a lower risk. This section explains different types of risk and how it is managed in a portfolio context.

Inflation - Inflation is a rise in the cost of goods and services that can erode your purchasing power. All investors should be concerned about inflation and how it impacts your financial goals.

 

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While this communication may be used to promote or market a transaction or an idea that is discussed in the publication, it is intended to provide general information about the subject matter covered and is provided with the understanding that The Principal® is not rendering legal, accounting, or tax advice. It is not a marketed opinion and may not be used to avoid penalties under the Internal Revenue Code. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. For more information about our funds, including their full names, please see the Principal Funds, Inc. prospectus or call Customer Service at 1.800.222.5852.

A mutual fund's share price and investment return will vary with market conditions, and the principal value of an investment when you sell your shares may be more or less than the original cost.

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