Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure – Please click here to read the full disclosure.

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Retirement Compounders®
  • Free Email Signup

$0 Commissions: Charles Schwab Has Always Been About Charles Schwab

October 8, 2019 By E.J. Smith

By carmen2011 @ Shutterstock.com

You may have seen that Charles Schwab has reduced its commissions to $0.

But when you dig a little deeper you realize there’s a catch. As it turns out it’s free but Schwab gets to use your cash, lend it out, and pocket-the interest you could have made.

“Schwab doesn’t use money-market funds or short-term Treasury funds, which could earn nearly 2% at recent rates,” explains Jason Zweig at the WSJ. “Instead, it shunts the cash into Charles Schwab Bank, which currently pays 0.55% on the money—and then turns around and lends it out at roughly 2%.”

Clearly you can see Schwab isn’t working for free.

It’s also my belief that Schwab’s discounted brokerage/commissions have done more harm than good. The program entices investors to spin their money into oblivion following trading schemes rather than patience.

When I think of Charles Schwab, I don’t envision a family wealth management firm.

I don’t see a conservative, Prudent Man philosophy guiding the firm.

I see churning and burning.

Investing is not supposed to be exciting.

Investing is supposed to be boring (that is until you start seeing your account compound into some serious money).

Schwab has always seemed to me to be too slick for his own good and enjoying the golf course far too often for a money manager.

Take a trip down memory lane. Have you ever lost money in stocks?

If you traded commodities or penny stocks in the 70s and 80s, you know exactly what I’m talking about.

“Can’t lose” trading books gather dust on bookshelves, not interest on interest.

At the end of the day, Schwab is a salesman and a billionaire, not an investor.

Doesn’t have a good ring to it does it?

Today the bets are being laid by Schwab that robo, passive ETFs, and mutual funds are the future.

But these are models that are active management–someone decides how they work and what to put in them.

You know in your gut that someone is winning off your $0 trades.

Originally posted on Your Survival Guy. 

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Doing Business with Fidelity (Not Schwab)
  • FOMO a Dangerous Investment Strategy
  • Breaking News: Fidelity’s $0 Commissions Done the Right Way
  • Author
  • Recent Posts
E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com

Click here to sign up for my free monthly Survive & Thrive letter.
Latest posts by E.J. Smith (see all)
  • Investing Mistakes to Avoid: #10 Picked Off First - June 9, 2023
  • Remember When You Were A Kid and Money Was Free? - June 8, 2023
  • Forbes Global 2000: The Bigger They Are, the Harder They Fall? - June 8, 2023

Search Young Research

Most Popular

  • Starving for Fixed Income? I Can Help
  • June Is Retirement Compounders Month
  • ALLIGATOR MARKET: Calm Surface Hides Danger Below
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • CBDCs Not “Just Another Form of Money”
  • What's Hiding In the London Metals Exchange Warehouses?
  • End of ESG?
  • China Increases Its Gold Reserves for Seventh Month Straight
  • Successful Investing Is a Mindset
  • Young’s Retirement Compounders

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

The Importance of a Balanced Portfolio

Invest with Peace of Mind and Comfort

What Kind of Life Are You Investing For?

RSS The Latest at Richardcyoung.com

  • Smoke Gets in Your Eyes
  • Investing Mistakes to Avoid: #10 Picked Off First
  • Carlson Urges America: “Cling to Your Taboos!”
  • TRUMP INDICTED: President Releases Video Defending Innocence
  • Oh Canada: Wildfires at a Blistering Pace
  • RAGE Gauge June: Remember When You Were A Kid and Money Was Free?
  • What Do You Know About Vanguard’s Wellesley Income Fund?
  • CRUMBLING EMPIRE: Major Hotel Flees San Francisco as City Suffers
  • MUSIC IN DANGER: Is This the Worst Use for AI?
  • Crushing the Heretics

RSS The Latest at Yoursurvivalguy.com

  • Investing Mistakes to Avoid: #10 Picked Off First
  • HOUSING CRISIS: California Could Face Mortgage Default Tsunami
  • Why Is Biden Sacrificing Mining Dominance to the Chinese?
  • RAGE Gauge June: Remember When You Were A Kid and Money Was Free?
  • Your Retirement Life: Striped Bass Fishing off Block Island
  • Artificial Intelligence or Four-Year Olds?
  • Forbes Global 2000: The Bigger They Are, the Harder They Fall?
  • Starving for Fixed Income? I Can Help
  • SUPER STATE RISING? This State Is Doing All the Right Things
  • End of ESG?

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2023 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.