In today’s market, a lot of attention goes to whoever is shouting the loudest or doing the most extraordinary things, whether it’s meme-stock aficionados, crypto zealots, or any other die-hard fan of the latest investing phenomenon. That can be good fodder for Hollywood but talk to real investors—particularly those who have been in the markets for decades—and they’ll tell you a very different story.
We did just that in a landmark study this year commemorating the 50th anniversary of Charles Schwab. We surveyed thousands of our clients to see what we could learn from their experiences and draw some conclusions about what leads to long-term investing and trading success.
The findings revealed that one of the most valuable assets successful investors possess has nothing to do with money—it is time.
Clients who have been with us for 40 and 50 years shared remarkably consistent stories. Eight in ten of them take great pride in the success they have achieved as investors, and they attribute that success to a small and simple set of principles that stand the test of time—namely discipline, consistency, and patience.
Some might think that’s boring. We don’t.
Too often, films and news coverage paint individual investors in broad strokes as too quick to follow the crowd and irrational in times of volatility. Our study suggests otherwise. It shows individual investors are actually quite good at tuning out the noise, and they get better at it with the benefit of time.
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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.
We found nearly nine out of ten (86%) clients who’ve been in the markets since before 2000 said they don’t let their emotions get in the way of their investing and trading strategies now as compared to when they first started investing.
Moreover, it’s not just the most seasoned investors who demonstrate the same kind of measure and focus. Across generations and experience levels, we found individual investors largely approach investing patiently, employ time-honored strategies like diversification, believe knowledge is power, and that learning from early mistakes is key.
Nearly nine in ten investors in our study described themselves as more of 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 focus on slower but steady long-term growth.
More than three-quarters said that if they could only use one investment product for the rest of their lives, it would be a broad market index fund.
And far and away investors said the #1 factor contributing to their investing success has been patience through volatility.
It’s worth noting that we are committed to serving every kind of investor at Schwab—from those with modest means to the wealthy, beginner to advanced, and strict buy-and-hold types to highly active traders. In fact, many of the first clients of our firm 50 years ago were determinedly independent stock traders who often gathered in our branch lobbies during the trading day to watch the old ticker displays that wound across the walls of our offices while they studied stock research reports.
Regardless of the many different ways to approach investing, the consistency of what we heard across the universe of our clients underscores the point that those core tenets of patience and discipline resonate for everyone no matter what kind of investor they are.
Investing will never be devoid of emotion or even difficult lessons. But 50 years since the founding of this company, it is inspiring to see just how many individual investors are doing all the right things.