cal fussman charles schwab

Charles Schwab: Investing, IRAs, Retirement, and More – Big Questions with Cal Fussman

Check out the Big Questions with Cal Fussman Episode Page

Key Takeaways

  • The best business advice you’ll ever hear: Give the customer what you would want if you were them
  • Take the long-term view
    • When the stock market drops (and it will), have the patience to stay invested
  • Younger people need a better education in terms of financial literacy 
  • The best time to start saving for retirement was yesterday; the second-best time is now


“What would I want if I was a customer?”

  • Charles and his company broke on to the scene by charging people less money to invest in the market than traditional firms
    • “Charles lives by a very simple code: ‘I want my company to give people what I would want if I were the customer.’ That principle has guided him every step of the way for decades.” – Cal Fussman

The Bowling Bust

  • In 1962, bowling was very popular in the U.S. – bowling alleys, bowling companies, companies who made the shoes/chalk, etc., they all were making money
    • But in 1963, the industry dropped 80% in value
      • This was the first significant bubble Charles experienced after business school, which he frequently likes to remind himself of
  • What did Charles learn from it?
    • “It was the first lesson in how valuations go in the stock market. The economy goes along pretty steadily – 4-5% per annum back then, maybe 2-3% per annum now. The stock market goes up, and it goes down. You can’t be enamored by the stock market. It’s always moving. Understand that when the market drops, and it always will, you need to have the patience to stay in there.”Charles Schwab 
    • “The whole bowling bust is a story about developing confidence in the future… Innovation will power us through to the next wave on the upside.” – Charles Schwab


  • A brief portion of Charles’ book describes how $1k invested in Charles’ company back in 1987 would be worth $21 million today (a profit of 21,000%)

Changing the Investment Paradigm

  • Before 1975, stock-buying was basically a closed industry
    • “The pricing of the stock market business had fixed rates for 200 years… The price of each transaction was set. It was very expensive for most average people to come into the stock market.” – Charles Schwab 
  • “Our mission at the time was to change the whole paradigm of stock investing and bring the rates down. That way, anybody could come in and invest. We also wanted to make it easier, more convenient, and 24/7.” – Charles Schwab
    • (The stock market used to run in sync with broker’s hours, 10 AM – 3 PM)

On Luck

  • “Luck, I think, comes a lot from study. You have to become an expert in whatever business you’re in… The more knowledge you have about a particular industry is certainly a key to becoming successful.” – Charles Schwab

Innovating IRAs

  • Back in 1982, typical banks were charging ~$25 to run an IRA account
    • “We said, ‘That’s ridiculous. We want people to INVEST.’ We took that down to $0, just like we did with commissions recently.”Charles Schwab
      • The result? – The number of people opening IRA accounts with Charles’ bank “ballooned” (to add – these people came in with their money, and also bought up mutual funds and stocks)

Looking Towards the Future

  • Stock prices have gone crazy (Amazon is hovering around $1700/share)
    • “We’re planning to fractionalize shares and make it cheaper in terms of pricing where people can buy a tenth or twentieth of a share”Charles Schwab
      • This will make it easier for younger folks without much money to get their start at investing
  • Another problem Charles plans to tackle?
    • People are getting to retirement with multiple accounts – 401k, IRA, etc.
      • “It’s very confusing when you get to be 65 and move into retirement mod… We’re going to make things easy with an ‘Income Management Account.’ This will make it possible for people to manage their affairs, get a single paycheck a month from their own assets, with social security added in, making life simpler and easier.” – Charles Schwab

Why aren’t younger people educated about finances?

  • “It’s a sad thing in America. We don’t have any education in terms of financial literacy. You don’t get it in high school, nor do you get it in college.” Charles Schwab
    • Because of this, many get into trouble with student loans as they take on too much debt
      • “Many of them will NEVER be able to pay it off”
    • “Managing debt. managing credit cards, managing all the financial things in your life, we need more education about all of this”
  • Charles plans for the profits from his book to go towards financial literacy for kids & college students

Retirement | Start Saving Now

  • Social security was designed many years ago in the late 1930s
    • At the time, the average man dies at 65. Today, this number is around 80.
  • Because of this, people need more money in retirement – it’s necessary to have a solid savings/retirement plan
    • “You got to start saving TODAY” Charles Schwab

Additional Notes

  • Charles found out he had dyslexia at age 40
  • At age 13, Scott “discovered” stocks for the first time when his father walked him through the stock page in the newspaper
  • The first Charles Schwab office was in San Francisco
    • They now have 400 offices around the country
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