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Charles Schwab: 'People have to learn how to deal with the volatility of free markets'

Yvette Killian

Charles Schwab, founder of his namesake company, is still a market bull despite recent volatility.

“People have to learn how to deal with the volatility of free markets, and that's what this is. You wouldn't want to have a controlled market, you have free markets. And free markets go up and down with interest rates, stocks, commodities, you name it.”

Schwab founded The Charles Schwab Corporation (SCHW) in California in 1971 and today the company employs close to 20,000 people and has $3.77 trillion assets under management. The pioneer in the discount brokerage industry is also the author of a new book “Invested: Changing Forever the Way Americans Invest.”

“Any time is a good time to invest if you want to get ahead in life and improve wealth. You have to get in, and you have to remain in. You can't be in and out all the time,” said Schwab.

Charles Schwab

Getting into the markets may become easier for people now that Schwab, Interactive Brokers (IBKR), E-Trade (ETFC), TD Ameritrade (AMTD) and Fidelity all recently announced they will move to a zero commission model. It took 45 years for Schwab to evolve to the point where online trade commissions for U.S.- and Canadian-listed equities are fee free. According to Schwab, the decision means it impacts the company’s revenues negatively by about 4% but he says the company’s wealth management services will help make up the difference.

Schwab encourages all investors to take a long view and not be distracted by quarterly numbers or get spooked by volatility and fear that comes with major market swings.

“I've been through many in my career,” he said, referring to financial downturns. “The fear factor comes in and people shrivel up and sort of, oh I better sell. That's their knee jerk reaction. You don't want to do that.”

Yvette Killian is a producer for Yahoo Finance’s On The Move.

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