Charles Schwab: If you start investing at this age, you’re making a mistake

Charles Schwab is one of the most successful entrepreneurs and leaders in American business, so when he has some advice for investors, you listen.

When should people start investing?

"I think people should start as soon as they possibly can."

- Charles Schwab, Charles Schwab Corporation founder

He said he hopes parents introduce their children to investing so they can start saving at the youngest possible age. But, he admitted, most parents don't do that and, unfortunately, the educational system doesn't do a great job of teaching it either.

"Schools don't teach this kind of thing, in terms of financial literacy, and so, it's, I think, a national problem that kids are not doing what they should do early in their lives," Schwab told FOX Business. "So, they lose all those years of compound interest, compound growth, so they don't really find out about investing or what the responsibility is for them to do until they're maybe 30 years of age."

Ticker Security Last Change Change %
SCHW THE CHARLES SCHWAB CORP. 63.16 +1.84 +3.00%

And age 30 is "way too long to wait," he said.

When should parents start teaching their kids about managing their finances?

"If I had a magic wand about changing the academic system, I would start, really, in high school with 'Introduction to Financial Decisions,'" Schwab said.

He's walking the walk not just talking the talk on that, too. He's currently supporting a program at Stanford University this spring along those very lines, which he anticipates will be very popular with students.

"I think the earlier you learn about all the things, whether it's credit cards or checking accounts or interest or borrowing or all those things put together ... and how will it influence you later in life," Schwab said.

"We all have to essentially take care of ourselves."

- Charles Schwab, Charles Schwab Corporation founder

"Other than Social Security ... we've got to do a lot for yourself," Schwab said. "So, as a parent, teach your kids early on, introduce them to it. If you're a teacher, hopefully, you introduce it somehow in the classrooms. But that is a big thing in America: Learning personal responsibility about your financial welfare."

What are some things to watch for when you start investing?

Schwab said when people are just getting started, you should think of one word: Diversification.

But what does that really mean?

"Learn about how you can get diversification because you don't want to put every dollar you have in one investment because the nature of investing is there's some risk behind all these things," Schwab said.

He said people beginning to invest should focus on index funds since they are rather inexpensive.

He said firms like Charles Schwab are good because they offer investments at a "very low cost or no cost" at all when starting out.


"There'll be other costs along the way, but look for the firms that provide the most efficient way of delivering service to you," Schwab said.

Charles Schwab is the founder, former CEO, and current chairman, of The Charles Schwab Corporation. Among the giants of the financial services industry, he is one of the most successful entrepreneurs and leaders in American business.