Throwback investing is having a moment

April 8, 2024 Matthew Wright
As with retro fashion and technology trends, tried-and-true investing strategies are gaining popularity.

Everything old is new again. Vinyl albums, “vintage” point-and-shoot digital cameras, print books, and even landline phones are making a comeback. And those aren’t the only ways people are going old school. While robo-advisers and online trading are here to stay, investors are adopting some tried-and-true approaches, too. 

Here’s a look at four throwback investing strategies that—much like baggy jeans, flip phones, and bucket hats—are enjoying a renaissance.

1. Choosing traditional assets

While flashy investments like cryptocurrency have generated a lot of buzz in recent years, many of today’s investors largely prefer sensible, proven investment vehicles over trendier options. A recent Charles Schwab study found that nearly 80% of investors would pick a broad market index fund if forced to choose only one investment product for the rest of their lives.

“Buying the market”—investing in a fund or funds that provide collective, broad exposure across all industries—is an established strategy investors have long relied on to build a sound, diversified portfolio. Index funds may not be flashy or sexy, but they provide some hedging against risks while letting investors capitalize on stock market growth.

“I think index funds will maintain popularity because of the flexibility they offer investors—especially when it comes to cost and time,” says Kevin Gordon, Director, Senior Investment Strategist at Charles Schwab. “For investors who may not be as comfortable taking an active approach to picking stocks, or who want to be less hands-on, index funds are a great way to maintain participation over time.”

2. Thinking long-term

Throwback investors are moving away from a YOLO lifestyle—at least when it comes to finances—to take a longer-term view. By doing so, they’re less likely to stress over short-term market gyrations or waste energy trying to time the market.

Forward-looking investors tend to create a plan and stick to it—confident their time in the market will allow them to take advantage of compounding returns. This approach can lead to greater and more consistent profits accrued over time. One-third of investors we surveyed said patience through market volatility contributed the most to their investing success. 

3. Implementing dollar-cost averaging

Along with building a diversified portfolio and thinking long term, throwback investors are adopting dollar-cost averaging. A straightforward method for creating good investing habits, it calls for regularly contributing a predetermined amount of money to investment accounts—regardless of the current performance of the markets or the economy. 

By following this strategy, investors know they’re making progress toward investment goals without constantly monitoring or managing their accounts.

4. Rebalancing strategically

One investing approach that will always stay popular, Kevin says, is portfolio rebalancing—selling something to buy something else to align with your asset allocation target. “Let your portfolio tell you when it’s time to do something, like trim a position that’s increased well beyond your target allocation.” While rebalancing can be difficult, it can be incredibly rewarding.

Revisiting familiar trends can offer a sense of comfort and peace—and throwback investing is no exception. “The throwback approach is a way for young investors to avoid the temptation to time the market, because no one can time the market,” Kevin says. “Too many mistakes are made when investors try to pick tops and bottoms.”

These tried-and-true strategies can help investors reduce stress around investment performance while helping to establish financial security for years to come. And that’s one trend that’ll never go out of style.