Schwab's Wisdom of the Crowd Study Finds
Long-term Investors Benefit Most from a Disciplined and Patient
Approach
Charles Schwab today released results from a comprehensive
survey of investors that provides helpful insights into the habits
and experiences of its clients and what clients see as critical to
their satisfaction and successful outcomes. 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.
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Charles Schwab, Founder &
Co-Chairman. (Photo: Business Wire)
“I hear regularly from clients, many who started with us at the
beginning – forty, even fifty 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,” said Schwab founder and
co-chairman Charles Schwab. “Fifty years of experience shows us
that diligent investors reap consistent rewards and really are the
smart money.”
Conducted to commemorate the firm’s 50th anniversary, The
Wisdom of the Crowd surveyed 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.
Consistent investing principles
When asked to share the lessons they’ve learned over time,
investors who have been at it the longest pointed to concepts such
as consistency and discipline as core to their success and lack of
research and bad timing as central to their unsuccessful outings.
These 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.”
“Fifty years of experience working with tens of millions of
clients provides an invaluable window into what works best for
investors,” said Jonathan Craig, managing director and head of
Schwab Investor Services. “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 and patience are virtues
The survey reinforced that one of the most valuable assets
successful investors possess has nothing to do with money – it is
time. 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. 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.
Investors are really good at tuning out the noise
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 ten investors described themselves as more like
a tortoise than a hare – deliberate and steady.
- Nearly nine in ten 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.
Generational experiences also shape investor attitudes and
behaviors
Some behavioral differences emerged between those who have been
investing for two decades or more and those with less experience.
For example, seasoned investors reported a steadier personal
engagement in investing, but on the flip side are less inclined to
react to market moves:
Investors who…
opened account before 2000
opened account after 2000
Identify as self-directed
67%
56%
Check investments often/regularly and get
involved in investment decisions
62%
50%
Do nothing in the face of a market
downswing (i.e., neither buy nor sell)
56%
46%
And digging one step deeper, Schwab’s survey suggests that Gen X
and Millennials tend to be more sensitive to market moves than
Boomers, and more likely to act in the face of market
volatility:
Investors who…
Millennials
Gen X
Boomers
Would buy or sell in an up market
42%
42%
36%
Would buy or sell in a down market
62%
56%
47%
“The past 30 years have seen significant economic upheaval, the
effects of which have disproportionately fallen on younger
cohorts,” said Mark Riepe, managing director and head of the Schwab
Center for Financial Research. “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.”
This insecurity and uncertainty may have a silver lining,
however: Millennials and Gen X are more inclined towards
collaboration and communication when it comes to investing:
Investors who…
Millennials
Gen X
Boomers
Feel more comfortable working with a
financial advisor now than when they began investing
50%
53%
47%
Discuss investing with their families more
now than when they began investing
75%
74%
62%
Millennials also embrace their role as the influencer
generation. Paradoxically, however, they’re also highly skeptical
of the tips they receive from others:
- Nearly half of Millennials (45%) said they’ve given an
investment recommendation.
- Just 46% said they invested based on a tip, compared to 51% of
Gen X and 52% of Boomers.
- Only two in five (39%) Millennials said they’ve lost money
investing based on a tip.
Paying it forward
Most respondents (59%) said they wish they had more knowledge
when they first started investing – and the data suggests that they
are working to close that gap for others. Forty-eight percent of
respondents said they’ve inspired someone to start investing, and
38% have taught someone else how to invest. More than a third (35%)
have opened or helped open an investment account for someone
else.
“During the past 50 years, we’ve seen the markets become
increasingly democratized, with more people learning about
investing, participating and realizing its benefits,” said Jonathan
Craig. “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.”
For additional findings, please read the full study here. More
information, client stories and content can be found here.
To learn more about how 50 years of experience and the
accumulated wisdom of the long-term view can help you as an
investor today, please call, drop by a branch or visit
Schwab.com.
About this study
THE WISDOM OF THE CROWD was a survey conducted for Charles
Schwab by Logica Research.* The 15-minute survey, conducted from
May 1 through 15, 2023, polled 3,006 Schwab investors aged 18 and
older.
* Logica Research is neither affiliated with, nor employed by,
Charles Schwab & Co., Inc.
About Charles Schwab
At Charles Schwab we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
More information is available at aboutschwab.com. Follow us on
Twitter, Facebook, YouTube, and LinkedIn.
Disclosures
Investing involves risk including loss of principal.
All expressions of opinion are subject to change without notice
in reaction to shifting market conditions. Data contained herein
from third-party providers is obtained from what are considered
reliable sources. However, its accuracy, completeness, or
reliability cannot be guaranteed. Supporting documentation for any
claims or statistical information is available upon request.
(1023-3BSL)
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Alison Wertheim Charles Schwab (415) 667-0475
alison.wertheim@schwab.com
Charles Schwab (NYSE:SCHW)
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