To commemorate its 50th anniversary, Westlake-based Charles Schwab has released results of a comprehensive survey of investors that the company said provides insights into the habits and experiences of its clients as well as what the clients see as critical to their satisfaction and successful outcomes.

“I hear regularly from clients, many who started with us at the beginning — 40, even 50 years ago — and they tell me that, more than anything, discipline, patience and learning from the occasional mistake pay off and have brought them a financial freedom they could only have dreamed of,” Schwab founder and co-Chairman Charles Schwab, said in a statement. “Fifty years of experience shows us that diligent investors reap consistent rewards and really are the smart money.”

The company said that among the study’s findings is a strong belief from its more seasoned investors that timeless investing principles such as persistence, diversification, early and regular investing, investing through different cycles, and sticking with a plan are keys to their success.

Wisdom of the Crowd

The survey, called The Wisdom of the Crowd, questioned more than 3,000 Schwab clients, ranging from its most-seasoned clients who opened their accounts in Schwab’s earliest days to those who have just recently ventured into investing.

Investors who have been at it the longest said concepts such as consistency and discipline were core to their success and lack of research and bad timing was central to their unsuccessful outings.

Schwab said those investors offered relatively consistent advice for those newer to investing, such as:

• “Long-term viewpoints are crucial to sticking to a plan when everything seems to be down, and the selling seems relentless. If you stick to your plan, you will do extremely well over long periods of time.”
• “Be realistic. Be patient. Don’t get emotional. Diversify, diversify, diversify.”
• “Align investments with your personal goals in mind, retirement, college, new house, etc.”
• “Consistency is very big in investing. Even a small amount will grow if you add to it on a consistent basis.”

Schwab’s long history in the industry gives it a unique outlook on investors.

“Fifty years of experience working with tens of millions of clients provides an invaluable window into what works best for investors,” Jonathan Craig, managing director and head of Schwab Investor Services, said in a statement. “We know that staying in the market longer pays off but were eager to hear directly from clients about the lessons they’ve learned along the way and to understand differences for those who’ve been at it longer and those newer to investing. Seeing the wisdom in a principled approach from our most experienced investors made a ton of sense to us. But we were pleasantly surprised to see that kind of thinking also reflected in large portions of investors across the entire age and experience spectrum.”

Time matters more than money

Schwab said that the survey reinforced that one of the most valuable assets successful investors possess has nothing to do with money — but rather time.

The company said that the length of time investors have been active is among the most important factors influencing how they navigate, fare in, and feel towards the markets.

Schwab said the survey found that:

• The vast majority (86%) of investors who’ve been at it since before 2000 said they don’t let their emotions get in the way of their investments now, as compared to when they first started investing.
• Investors who have been in the market the longest are also the investors who are having the most fun: 63% of those who’ve been investing since 1980 said they are having more fun with their investments now than when they first started, while only 55% of the newest investors said the same.
• More experienced investors also have more pride: 80% of investors who began in the 1980s or earlier are proud of their accomplishments as an investor.

The company said that while there were some differences depending on how long investors had been at it, what they have in common reveals that decades of consistent investor education is working: rather than fall prey to emotions, distractions and hyped promises of performance, investors at every stage are remarkably disciplined:

Nearly nine in 10 investors described themselves as more like a tortoise than a hare – deliberate and steady.

Nearly nine in 10 said if they were given $100,000 today, they’d limit risk and potential short-term gains to focus on slower but steady long-term growth.

More than three-quarters of investors said that if they could only use one investment product for the rest of their lives, it would be a broad market index fund.

One-third said patience through volatility contributed most to their investing success.

Effects of economic upheaval

Schwab said that generational experiences help shape investor attitudes and behaviors and that some behavioral differences emerged between those who have been investing for two decades or more and those with less experience.

“The past 30 years have seen significant economic upheaval, the effects of which have disproportionately fallen on younger cohorts,” Mark Riepe, managing director and head of the Schwab Center for Financial Research, said in a statement. “Economic events, combined with factors like the rise of student debt, the decline of pensions, and persistent political uncertainty, have naturally shaped how investors engage with the markets. It’s important to learn from your experiences, but you want to learn the right lessons. It’s especially important to avoid overreacting – if you do, you risk becoming a prisoner of your own experiences.”

Schwab said that insecurity and uncertainty may have a silver lining, though, as millennials and Gen Xers are more inclined towards collaboration and communication when it comes to investing.

“During the past 50 years, we’ve seen the markets become increasingly democratized, with more people learning about investing, participating and realizing its benefits,” Craig said. “It’s incredibly satisfying to see so many clients rightly feel proud of what they’ve accomplished, practicing the time-tested principles that contribute to their success and eager to share what they’ve learned with others.”

The survey was conducted for Charles Schwab by Logica Research May 1-15, and it polled 3,006 Schwab investors aged 18 and older.

Get on the list.
Dallas Innovates, every day.

Sign up to keep your eye on what’s new and next in Dallas-Fort Worth, every day.