Schwab Is Bullish on 0% Commissions
The discount brokerage founder also wants to boost financial literacy.

Charles Schwab’s latest book, Invested, is part memoir and part ode to the brokerage firm he founded that in many ways changed how Americans invest. He chronicled the firm’s beginnings for Schwab employees, he says, so they would never “lose their compass” for the company’s mission: To come up with new ways to make investing easier and cheaper. We recently interviewed Schwab at the Kiplinger offices in Washington, D.C.
Most Americans don’t have a pension and must figure out how to pay themselves in retirement. What can firms like Schwab do to help? First, we need to get people to save. They need to know how to invest it, too. It can’t go into a sleepy savings account. The best place for growth is stocks, but you need to be diversified. We have an income management account coming this spring that will help people figure out how much to withdraw in retirement so that their money will last.
Does the firm have anything in the works for younger investors? Index funds are good investments, but they’re boring. We want to get kids into buying stocks. We’re launching fractional ownership, so customers can buy one-tenth of a share in a company. Ten shares of Amazon.com today would cost $17,000. Who has that kind of money? That’s coming in the spring, too.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Schwab led the way with zero commissions. Will that encourage risky trading? If I could start Schwab over again, I’d have no commissions. I’ve always been down on commissions -- it’s the wrong way to deal with people in a fiduciary relationship. A $0 commission shouldn’t change how investors behave, but it will let us talk about other things and help people figure out simple, low-cost ways to invest and accumulate assets.
Given the long bull market, have investors forgotten what a downturn looks like? There will always be bear markets. A stock can lose half its value in those periods. It’s harsh at times. Recent bear markets have been marked by bubbles. It reminds me of an early lesson I learned in 1961. Back then, everybody was going to be a bowler. So all of the bowling stocks, bowling shoe and ball makers, they all had incredible valuations. Well, guess what? Not everybody was a bowler, and the stocks collapsed. Today, the concept around WeWork was completely a bubble. You want to make sure you are invested in solid companies that grow and innovate.
Do you still actively trade at Schwab? Yes. I invest in a variety of things, including biotech companies. One out of 10 might work out; others are 100% losses. I also have index funds, mutual funds and one large position in a single stock. I watch it very carefully.

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
Stock Market Today: Stocks Give Back GDP Gains After Beige Book
The latest GDP report showed the U.S. economy grew at a rapid-fire rate in the third quarter, but the Fed's Beige Book sparked concerns.
By Karee Venema Published
-
How Charlie Munger Helped Create Berkshire Hathaway, and Warren Buffett
Munger's passing reminds us that Berkshire Hathaway is much more than the value of its stock holdings.
By Dan Burrows Published
-
Is a Medicare Advantage Plan Right for You?
Medicare Advantage plans can provide additional benefits beneficiaries can't get through original Medicare for no or a low monthly premium. But there are downsides to this insurance too.
By Jackie Stewart Published
-
What You Must Know About the Different Parts of Medicare
Medicare Medicare can be complicated but we've got you covered. Here is a quick guide to the different benefits provided through each part.
By Jackie Stewart Last updated
-
Retirees, It's Not Too Late to Buy Life Insurance
life insurance Improvements in underwriting have made it easier to qualify for life insurance, which can be a useful estate-planning tool.
By David Rodeck Published
-
Best Banks for Retirees
banking Kiplinger's 2023 list of the best banks for retirees.
By Lisa Gerstner Published
-
Best Banks for High-Net-Worth Clients
wealth management Kiplinger's 2023 list of the best banks for higher-net-worth clients.
By Lisa Gerstner Published
-
Stock Market Holidays in 2023: NYSE, NASDAQ and Wall Street Holidays
Markets When are the stock market holidays? Take a look at which days the NYSE, Nasdaq and bond markets are off in 2023.
By Kyle Woodley Last updated
-
Stock Market Trading Hours: What Time Is the Stock Market Open Today?
Markets When does the market open? It's true the stock market does have regular hours, but trading doesn't necessarily stop when the major exchanges close.
By Michael DeSenne Last updated
-
Bogleheads Stay the Course
Bears and market volatility don’t scare these die-hard Vanguard investors.
By Kim Clark Published