Charles Schwab’s tips for novice investors

Charles R. Schwab, billionaire and legend in low-cost investing who managed to become a household name, has this advice to investors just starting out:

On what to read: “There was a guy by the name of Charles Schwab, actually—Charles M. Schwab. I read a lot about him and always hoped I was related, but I wasn’t. He worked for J.P. Morgan and then started Bethlehem Steel. I tried to read all the biographies of the famous men of the last 100 years or so; that gave me inspiration.

“One book that shows the craziness of the human mind is a classic: Extraordinary Popular Delusions and the Madness of Crowds (by Charles Mackay), and that was written in the 1840s.”

On investing while broke: “Just get started. That’s the most difficult thing: to pull the trigger to put the first hundred or thousand bucks in. Try to be disciplined. … Put money aside, and by the end of the month you’ll have an extra 25 bucks to put in the till.”

Low inflation is insidious, he warns: “Even at 2%, every 10 years you lose 20% of the value of your money. How do you prevent that? Invest your money in equities to stay ahead of inflation.”

On where to invest: He recommends broad-based indices, a large-company index fund or the S&P 1000. “I’d buy two—one more global, one domestic, probably 50/50. I think the U.S. is going to grow reasonably well over the next 40 years, and some parts of the rest of the world will grow enormously.”

— Adapted from “LeaderBoard: Charles R. Schwab,” Forbes.