Why investing shouldn't just be about retirement

A brokerage account can be one part of achieving your financial objectives.

A solid financial future should include three components: saving for short-term needs, investing for mid-term goals and planning for your retirement income. They're all important, and ignoring one can put you at risk of not achieving some of your goals. If you're already saving in a bank account and contributing to a retirement plan, you're off to a great start, but you may be overlooking the middle pillar.

What is a brokerage account?

A brokerage account is a way for you to buy a variety of assets—mutual funds, stocks, bonds, CDs and more—while taking advantage of research tools and education available to help you choose the right investment options for your risk tolerance.

Investing can be a smart and efficient way to build wealth. Many people think that to have a brokerage account you have to buy individual stocks or be an active trader, but investing through a brokerage account is similar to what you do in your 403(b) or 401(k) retirement plan. The difference is that those types of accounts are specifically designed to provide you with money you can draw on in retirement.

Learn more about brokerage accounts and their benefits

It's likely you have goals other than what you have planned for retirement. These could include buying a new car, remodeling your kitchen or even taking a once-in-a-lifetime vacation. Investing with a brokerage account is a way to help attain those goals. That doesn't mean you should stop saving or stop contributing to your retirement account. You simply reallocate a portion of your money—through a one-time contribution or on a regular basis—to a brokerage account to help you with those other objectives. If you open a brokerage account with TIAA along with a retirement account and a bank account, you'll also have the ability to easily review all of your finances through one portal and you can easily transfer money to help fund your accounts.

To invest or not to invest?

Use your goal to determine the appropriate vehicle for your money.

When to invest and when to save

When it may make sense to have a brokerage account

Investing with a brokerage account can be a good choice for the following situations:

  • Your timeline is slightly longer. Leaving your money in the market gives you a better chance of avoiding year-by-year volatility or losses and gives your money more of a chance to grow. In the 10 years between 2008-2017, for example, the S&P 500 had an average annual return of 10.4%, but return for individual years varied dramatically, including a loss in 2008.
  • You have a goal in addition to retirement. Investing can help you build toward mid-term goals.

Managing through volatility

Year-by-year fluctuations in the market may make longer-term investing a better strategy than thinking short term.

Annual return of the S and P 500 index 2011-2020

When it may not make sense to use a brokerage account

You may want to think about options other than a brokerage account for some of your money for these reasons:

  • You need—or could need—the money now. If you want to make sure you have money for an emergency or to pay your monthly bills, it may be smarter to keep it in a savings account or other vehicle.
  • You won't use this portion of your money until retirement. Retirement savings plans, such as 403(b)s, 401(k)s or Traditional or Roth IRAs, typically have tax benefits over brokerage accounts if you're planning for the long term.

3 tips to get started with a brokerage account

Think about what you're investing for and how it fits into your budget.

Choose a goal and timeframe, set aside a portion of your budget, setup an automatic transfer

Getting started

Investing with a brokerage account is easier than ever, and more convenient.

  • You can set up an investment account and check your progress online or over your phone.
  • You can contribute any amount to your account at any time through a variety of transfer methods. Even a small initial investment has the opportunity to grow.
  • You have access to all kinds of different investments, including mutual funds, ETFs, stocks, bonds, CDs and more.
  • The many research tools available through TIAA allow you to choose investment options that match your comfort with risk.
  • TIAA tools can even help you find options matched with your values related to sustainability or corporate citizenship.

Open an account

Get started today. It takes just a few steps.

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This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor's own objectives and circumstances.

You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877-518-9161 for product and fund prospectuses that contain this and other information. Please read the prospectuses carefully before investing.

Investing involves risk and your investments may gain or lose value, and will fluctuate over time. Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not bank deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.

TIAA Brokerage, a division of TIAA-CREF Individual & Institutional Services, LLC, Member FINRA and SIPC, distributes securities. Brokerage accounts are carried by Pershing, LLC, a subsidiary of The Bank of New York Mellon Corporation, Member FINRA, NYSE, SIPC.