According to a new study released today by Charles Schwab, consumers are far less likely to shop around for financial products than for household products such as TVs and appliances and the disparity is striking when it comes to buying bonds. Even among the 61% self-described bargain hunters, most of whom know that pricing on financial products vary greatly, confusion and inertia overcome the desire to get the best deal when buying bonds: while 51% will shop around for the best price on a gas grill, only 17% will do the same for a bond.
“In this low interest rate environment, consumers are hungering for yield. The more you pay for a given bond, the less yield you’ll earn on it,” said Peter Crawford, senior vice president at Charles Schwab. “The majority of retail investors are informed shoppers and know that bond pricing varies a lot from firm to firm, yet very few of them take the time to shop around. Our message is simple: investors shouldn’t feel resigned to pay blindly for bonds.”
Bargain Hunting For Bonds: How Investors Shop is a Charles Schwab study that explores the mindset and behavior of individual investors when shopping for consumer goods and financial products, with an in-depth look at attitudes towards bond buying. The online survey conducted by Koski Research was completed by 514 individual investors in the U.S. with a minimum of $100,000 in total investable assets. The study took place from May 16 to June 1, 2013.
Comparison Shop ‘Til They DropWhen shopping for household products and consumer goods, our survey indicates that investors are committed to finding a good deal. Study respondents say they are extremely likely to compare prices for cars (80 percent), airline tickets (77 percent), HD TVs (71 percent) and gas grills (51 percent). More than 90 percent of investors are confident in their ability to find the best price for these items.