Book Summary: Invested by Charles Schwab

Quick Summary: Charles Schwab recounts the story of the brokerage firm that revolutionized the industry in his memoir Invested (2019). Despite his dyslexia and numerous financial crises, he was able to keep the Charles Schwab Corporation afloat and grow it into an industry behemoth.

His client-oriented approach and consistent implementation of innovative investment approaches were critical to his success. The Charles Schwab Corporation made it possible for anyone to take part in new and exciting opportunities in the industry.

Invested by Charles Schwab Book Summary

The Rise of Charles Schwab

Charles Schwab had been interested in investing since he was a child, when his father showed him stock graphs. Many people participate in a thriving economy by investing. This kind of faith is the pinnacle of positivity. You must have faith that the money you invest will grow. You must believe that things will get better in the future.

Schwab’s brokerage firm, now known as the Charles Schwab Corporation, began modestly in the early 1970s. However, the deregulation announced on May 1, 1975, which allowed stock prices to be determined solely by the market, provided Schwab with an opportunity to expand and develop his business.

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Childhood Struggles

Money attitudes, budgeting and spending habits, as well as risk tolerance, are all deeply ingrained and emotional. Schwab was born on July 29, 1937, in Sacramento, California, and his childhood in a post-Depression economy had a profound impact on him. He grew tired of limitations and decided to pursue financial independence through investing.

Another impediment to his childhood was undiagnosed dyslexia. Learning was difficult for him, but he persevered despite the difficulties. Schwab’s difficulties did not prevent him from achieving success in life. He worked hard, learned useful skills such as public speaking, participated in sports clubs, and ran for school office.

Schwab worked a variety of jobs as a child because he was determined to achieve financial independence. His jobs included everything from plucking ducks for his father to selling insulation door-to-door. These jobs taught Schwab valuable lessons about what he liked and disliked in life, as well as introduced him to interesting people who helped him grow.

When his son Michael was diagnosed with dyslexia in 1983, Schwab realized he had it as well. He finally understood why school was so difficult for him and why he felt less intelligent than his peers. Despite his dyslexia, Schwab was admitted to Stanford with great difficulty. During his senior year at Stanford, he married Susan, a fellow student. Because of his good grades, he was admitted to Stanford Business School and welcomed his first daughter Carrie in January 1960.

Market Uncertainty

When it comes to the stock market, there are no guarantees. A company’s customer satisfaction, cost containment, superior products, and process quality and integrity are all things that can be determined. However, you cannot be certain of the outcome. Taking risks is part of the game. Schwab learned the hard way when he was fired from his first investing job at Foster Investment Services, a financial advisory firm, for suggesting that clients be given refunds when the market was down. During that period, Schwab’s family grew to include daughter Virginia in 1962, and Sandy, his first son, in 1964.

Schwab’s early investment jobs taught him how to adapt to market volatility. He believed that businesses are built to grow and that diversification, low costs, and time are critical factors in that growth.

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The Turmoil of the 1970s

Schwab divorced in 1972 because he failed to maintain a balance between his marriage and his work life, particularly after the market began to decline in 1966, making investing a risky business. Schwab married Helen O’Neill later that year.

Because of the state of the market, the following years were filled with struggles and debt, but Schwab refused to give up on his company, which was first known as First Commander, then as Charles Schwab & Company, Incorporated, and was based in San Francisco.

After Deregulation

The amendments enacted on May 1, 1975, had a significant impact on the brokerage industry and American investment trends. Schwab saw relaunching Charles Schwab & Company as an innovative brokerage as a good opportunity. Schwab’s goal was to build a completely new type of customer base, one made up of independent investors who wanted to be in charge of their own financial future, who researched and chose stocks without relying on broker advice. Rather than selling stocks, Schwab recognized that he could promote discount brokerage services while also providing excellent customer service.

Customers, rather than the broker, initiated transactions at Schwab’s company. Its primary function was to fulfill the wishes of the customers. The company barely made a profit in the first few years after deregulation. However, Schwab insisted on expanding the company, and profits gradually increased.

Working at Schwab was both exciting and difficult. Because of the high levels of stress and low pay, there was a lot of employee turnover. The company struggled, but with each setback, it grew stronger.

Growth Strategies

Money makes exercising skepticism and common sense difficult. Everyone wants to believe. Salespeople exploit buyer psychology by telling them whatever they want to believe, but Schwab was adamant that such tactics would not be used in his company.

He made it a point to inform his customers that they would not be bombarded with sales pitches. This was accomplished through extensive advertising, which included brochures, speeches, meetings, and radio shows. Schwab also relied on word of mouth to increase the credibility of his company and spread the word.

When his uncle William Schwab, known as Uncle Bill, who was an investor in the company, forced him to open a new branch in Sacramento in 1975, Schwab’s business grew exponentially. Schwab then expanded his company into numerous branches, each of which brought more growth and success. Branches provided the company with an early competitive advantage.

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A Technological Leap

Entrepreneurs do not typically take risks in the same way that gamblers do. They always start with a concept and then realize it can’t be completed without some level of risk. True entrepreneurs, on the other hand, try to keep their risks under control.

Schwab paid $500,000 for an electronic brokerage execution and transaction accounting (BETA) system in 1979. The system was riddled with flaws and failures, but Schwab and his colleagues knew they had to rely on technology to reduce error margins over time. Schwab’s early involvement with technology gave the firm a level of comfort that set it apart. It put the company years ahead of the competition and prepared it for the explosion of the internet in the 1990s.

Selling and Rebuying Schwab

In order to raise more capital, Schwab decided to take his company public in 1980. Schwab valued the company at $4 per share on 1.2 million shares. As a result, he could earn $4.8 million. The company, however, was officially valued at $2.75 per share. Schwab terminated the initial public offering (IPO) process immediately.

Bank of America (BofA), the country’s second-largest bank, expressed interest in purchasing the Charles Schwab Corporation in 1981. The agreement was complicated, but it promised Schwab an immediate $7 million and was signed. The deal with BofA gave the company instant credibility. However, the bank experienced turbulent months following the completion of the deal, which allowed for changes post-signature. As a result, BofA ended up paying less than what was originally agreed upon.

The Charles Schwab Corporation became a subsidiary of BofA, which increased the company’s legitimacy and capital access. Under BofA, the company advanced tremendously. Many of its services, such as the Schwab One asset management account and its online trading services, were developed during the BofA period.

However, Schwab was skeptical of BofA’s performance and was aware that its strategies were unhealthy. He was also concerned about his company, as his investors’ profits had decreased following the BofA deal. Schwab attempted to intervene and propose solutions, but the board was enraged by his proposals, which included layoffs, the sale of unproductive assets, and a complete change of management.

Schwab’s dissatisfaction with BofA grew stronger in 1985. As a result, he resigned from the BofA board in 1986. He was removed from the Charles Schwab Corporation board of directors but retained his position as CEO. Soon after, BofA’s director, Sam Armacost, was fired.

His predecessor, Tom Clausen, took his place. Clausen auctioned off the Charles Schwab Corporation. Schwab considered suing BofA and resigning his company based on claims that the bank did not follow the terms of their agreement. Schwab did not pursue the lawsuit, but with the threat of legal action, BofA decided to sell the company back to him for $280 million in March 1987, in a deal that benefited Schwab.

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Schwab Goes Public

Schwab attempted another IPO soon after repurchasing the Charles Schwab Corporation. The company required funds to expand and pay off debts incurred as a result of the purchase. The transaction, which went much more smoothly this time, was completed on September 22, 1987. The company’s value closed at $16.625 per share for 8 million shares.

The transaction was the result of good fortune and calculated expectations. It was very timely: Schwab had predicted a market crash in the near future, and the market did indeed crash on October 19, 1987. Finding opportunities in lucky happenstance requires wisdom, knowledge, and experience. You must be prepared to profit from luck when it strikes, and you must learn to create luck for yourself.

The 1987 Crash

The 1987 stock market crash was historic. Schwab had prepared his staff for it, but they still struggled to process all of the client selling orders. Their technology also fell short, forcing employees to complete transactions on paper.

Schwab had worked hard to get people to invest, and while he knew the crash was not permanent, he was concerned about losing investors’ trust. The Federal Reserve’s involvement as a source of liquidity for the market helped to resolve the crash. Schwab’s problems, however, were far from over. In addition to the turbulence of the crash, the company was forced to publicly admit significant losses. However, the crash presented an opportunity. The company grew stronger, more mature, and more resilient, and its influence grew.

Investing in Mutual Funds

The next step in expansion was to tap into the thriving mutual funds industry of the 1990s. In 1991, the company launched the Schwab 1000 mutual fund, in which each share represented a stake in one of the thousand largest companies in the United States.

Schwab also launched a new company, OneSource, where investors could purchase mutual funds. It was designed for smaller mutual funds that couldn’t compete with the industry’s titans. OneSource, which debuted in 1992, was a huge success, drawing clients to Schwab. It sparked a market revolution and completely altered the market.

Charles Schwab Corporation experienced tremendous growth as a result of OneSource. In March 1992, a new service was introduced. Individual Retirement Accounts (IRAs) with no fees were another unanticipated success. Adding new services resulted in a more diverse income stream as well as a larger client base.

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Online Investment

Schwab made another technological leap when he joined the internet in 1995. The company created an online transaction system, and Schwab was adamant about getting it up and running as soon as possible, even if it wasn’t perfect. In March 1996, the online platform was launched. The first period was difficult, but Schwab was pleased that some clients were using the platform despite its flaws.

It wasn’t until 1998 that online services took off and became profitable. Schwab also worked on branch expansion, which resulted in a significant increase in profit and growth that year.

The period of expansion that began around 1998 resulted in continued growth, including to foreign territories such as Japan and Australia. New online services have also been launched. However, in the spring of 2000, the market began to slow and trades decreased. Following the dot-com bubble crash in 2001, this put extreme pressure on the Charles Schwab Corporation, forcing management to lay off over 2,000 employees and impose cuts across the board.

The September 11 attacks had a negative impact on the economy, which fell further in 2002 and after the invasion of Iraq in 2003. Furthermore, Schwab had to leave his company for a few months to care for his daughter Katie, who was injured in a building fire in New York.

In the midst of the chaos, he felt the company was losing focus. Schwab needed new services to keep the company afloat, so he created the Charles Schwab Bank, which debuted in 2003. In May 2003, he named David S. Pottruck, a longtime employee and co-CEO, as the new CEO of the Charles Schwab Corporation. However, the company was still struggling and required significant structural reforms.

Schwab Returns

Pottruck proposed selling the Charles Schwab Corporation in 2004 because he couldn’t find solutions to its problems. Schwab was adamantly opposed. The management team was also dissatisfied with Pottruck’s leadership. Pottruck was fired as CEO on July 19 and was replaced by Schwab.

The company needed to be restructured, but it also needed to reconnect with its customers in order to return to its original mission of serving them. This was achieved through the use of mutual funds, banking, advice, and income solutions.

Complexity was one of the company’s major issues at the time. Schwab worked to streamline its structure, services, and workforce. By the end of 2004, Schwab’s business strategy had been simplified, and its prices had become market competitive, allowing for increased revenue.

In 2005, Schwab insisted on completing all of the company’s plans. Throughout, clients were informed of changes to assuage their concerns through meetings, town halls, and advertisements. Following that, the organization was transformed into a relationship-based model, with each customer with a minimum of $250,000 in assets assigned to a financial adviser.

The results were encouraging. Right away, satisfaction increased. For advertisements, the company used the slogan “Talk to Chuck,” which is Charles Schwab’s nickname. This tagline was a success because it reflected the company’s personalized and client-focused mission.

By the end of 2006, the Charles Schwab Corporation had reduced bureaucracy, tightened its decision-making process and finances, and increased productivity. The advertising campaign for the company was also in full swing.

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The 2007 Crisis

The company’s upward trend came to an end in 2007. By 2008, the real estate bubble had burst, plunging the country into recession. Some of the company’s funds experienced significant losses, and investments in the Charles Schwab Bank lost value as a result of the crisis. Nonetheless, the company was handling the crisis far better than other companies and banks. Schwab was still gaining new customers and expanding.

In July 2008, Schwab resigned as CEO and was succeeded by Walt Bettinger. Bettinger joined the Schwab team in 1995, after the company acquired his own, the Hampton Company. Schwab saw him as a reliable leader who shared his values and vision.

The market had recovered from the financial crisis by 2010. However, investors remained wary, and even minor fluctuations worried them. As a result, Charles Schwab Corporation’s revenues were at an all-time low. Despite the difficulties, the company remained focused on its core mission of satisfying existing customers and attracting new ones.

It thrived in this department under Bettinger’s direction. The goal was to remain focused on customer satisfaction while avoiding distractions from other priorities. If you want to succeed, you must keep your costs low and provide excellent customer service. Investors will choose you over your competitors, your company will thrive, and your shareholders will benefit.

Revenue increased in late 2010, and investments resumed. This trend continued in 2019, with profits and client accounts reaching all-time highs. Schwab was successful in realizing his dream of creating a financial experience that included brokerage, banking, investment advice, and financial planning, among other things.

Invested by Charles Schwab Review

Charles Schwab combines informal writing with a technical style that is not intended for a general audience. He occasionally employs financial jargon, often without explanation, but he also adopts a conversational tone. The book’s five parts correspond to the various eras of Schwab’s company, which helps keep the action on track. He also includes a gallery of photographs of Schwab, other employees, and company events, as well as advertising examples.

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About The Author

Charles Schwab is a businessman and investor from the United States. He earned a BA in economics from Stanford University and an MBA from Stanford Graduate School of Business. In 1971, he established the first discount brokerage firm. It now has millions of customers and a diverse range of services. He was the company’s CEO for the majority of its history and is still its chairman. He has also written several best-selling investment books.

Invested by Charles Schwab Quotes

“No matter how comfortable they became, they always talked about the hard times when they were young. They’d seen people lose their homes and their independence, and they weren’t ever going to let that happen to them.”


“It isn’t just attitudes about money that form early in our lives. So much of who we are and how we act later in life is set into place early on, through parents, teachers, the way we fill our days.”


“I thought, Well, if I could buy them low, and then sell them high, boy, wouldn’t that be a great way to make money.”


“In Santa Barbara, I became Chuck. As a kid growing up in Woodland, my nickname was Buddy. But I thought Buddy was too informal, too much of a kid’s name. And when we moved to Santa Barbara, I wanted to drop it.”


“With each, I learned and got stronger.”

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