Bank of America | Help | Frequently Asked Questions | for Business Investments

Investing is about taking calculated risks in return for potential financial rewards such as being able to afford a secure retirement or sending your children to college.

On average, investments such as stocks, bonds and mutual funds have historically (past performance is no guarantee of future results) delivered higher returns over time than interest paid on regular savings accounts. But the risks of investing compared to a savings account are greater: There is no guarantee of higher returns, and it’s possible to lose your principal (for example, the amount you originally invested). Yet even in a savings account, money is vulnerable to the risk of inflation.

As a result, investment professionals generally suggest that diversifying your investments based on your goals and needs should be considered. But investment planning is a lot more than just dividing your money across different types of investments. The key aspects of most investment plans, whether they’re done on your own or with the guidance of an investment professional, include:

• Outlining short- and long-term life goals and translating those goals into financial objectives (for example, how much money you’ll need to meet your objectives)
• Understanding the ways you incur debt and putting a plan in place for reducing debt if necessary
• Determining tolerance for assuming risk and establishing the time frame you have to pursue your goals
• Designing an investment plan with a diverse mix of investments (asset allocation) that can help your plan succeed. One key to successful investment planning is developing a plan that guides your investment decisions over time and helps keep pace with changes in your life.