Is Schwab Intelligent Portfolio OK for taxable accounts???

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
davidkw
Posts: 794
Joined: Sun Feb 25, 2007 6:39 pm
Location: Northern VA

Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by davidkw » Mon May 22, 2017 4:41 pm

The Schwab Intelligent Portfolio has tax loss harvesting. How would this compare to the Vanguard Total Stock Market Index that has 100% qualified dividends? This seems like an OK portfolio since I like the value addition with the Fundamental indexes. Would work for an IRA. Just not sure about taxable.



Stocks 65%
US Large Company Stocks - Fundamental 11%
US Large Company Stocks 9%
US Small Company Stocks - Fundamental 8%
International Developed Large Company Stocks - Fundamental 8%
International Developed Large Company Stocks 5%
International Emerging Market Stocks - Fundamental 5%
US Small Company Stocks 4%
International Developed Small Company Stocks - Fundamental 4%
International Developed Small Company Stocks 3%
International Emerging Market Stocks 3%
US Exchange-Traded REITs 3%
International Exchange-Traded REITs 2%

Fixed Income 21.5%
US Corporate High Yield Bonds 8%
International Emerging Market Bonds 7%
US Securitized Bonds 3%
International Developed Country Bonds 2.5%
US Investment Grade Corporate Bonds 1%


Gold and Other Precious Metals 5%
Cash 8.5%
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

retiredjg
Posts: 33554
Joined: Thu Jan 10, 2008 12:56 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by retiredjg » Mon May 22, 2017 5:20 pm

davidkw wrote: Fixed Income 21.5%
US Corporate High Yield Bonds 8%
International Emerging Market Bonds 7%
US Securitized Bonds 3%
International Developed Country Bonds 2.5%
US Investment Grade Corporate Bonds 1%
Surely Schwab is not offering this as appropriate for a taxable account for anyone who is not in one of the lowest tax brackets.

davidkw
Posts: 794
Joined: Sun Feb 25, 2007 6:39 pm
Location: Northern VA

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by davidkw » Mon May 22, 2017 5:28 pm

Is anyone using the Schwab Intelligent Portfolio?
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

User avatar
brother7
Posts: 157
Joined: Mon Mar 27, 2017 4:48 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by brother7 » Mon May 22, 2017 5:38 pm

The reviews I've read are critical of Schwab's large cash holding. That's one reason why I decided to experiment with Betterment instead.

retiredjg brings up a good point... bonds belong in tax-advantaged accounts unless they are municipal bonds. One should consider all accounts when determining the most tax-efficient placement of assets within those accounts.

pkcrafter
Posts: 13012
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by pkcrafter » Mon May 22, 2017 6:35 pm

David, you didn't actually say what type of accounts those funds are in, IRA, taxable or both? Retiredjg's comment is relevant. I don't think the stock funds (too many) or bond funds (very tax In-efficient) are suitable for a taxable account. How often are they rebalancing the equity funds?

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

davidkw
Posts: 794
Joined: Sun Feb 25, 2007 6:39 pm
Location: Northern VA

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by davidkw » Mon May 22, 2017 6:46 pm

David, you didn't actually say what type of accounts those funds are in, IRA, taxable or both? Retiredjg's comment is relevant. I don't think the stock funds (too many) or bond funds (very tax In-efficient) are suitable for a taxable account. How often are they rebalancing the equity funds?
I would not mind using the Schwab Intelligent Portfolio for an IRA or a Roth account.

Schwab says it has tax loss harvesting. However, it looks like their Intelligent Portfolio would be not good for a taxable account with the tax inefficient asset classes. Just want thoughts on use for a taxable account
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

Doubleeagle4me
Posts: 46
Joined: Sun Jan 18, 2015 7:03 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by Doubleeagle4me » Mon May 22, 2017 7:14 pm

Have had a good chunk of money in it for over a year and a half. I was skeptical at first and would be the first to get out of it
If it didn't perform. All I can say is it outperforms. It's up a little over 7% this year. Something to be said about robot trading.
Takes all the emotion out of it. Staying the course for now.

patient_investor
Posts: 15
Joined: Sat Mar 18, 2017 12:15 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by patient_investor » Mon May 22, 2017 8:52 pm

I was offered this service after opening Schwab Brokerage account. Declined.

The biggest problem I see is the presence of "Fundamental" ETFs in the mix.

Fundamental ETFs:
- are more expensive (0.25% vs 0.04% on average I think)
- have wider trading spreads (very few trade them as, honestly, very few need them outside of Schwab's forced allocation)
- deviate from the plain index. Schwab claims that "fundamentals" are cherry-picked stocks by them, but so far most of them have been lagging simple indices for the last few years at least.

Fundamental ETFs are essentially a relatively cheap managed portfolio vs a much cheaper index. The choice is yours.
Another problem with the Intelligent portfolio - they force you to keep some cash earning ~0%. Gain for them, loss for you.

In summary: they force you into cash and fundamental ETFs in order to make money off you. The rest of the portfolio (~40% or so) is fine.

Copying a sample allocation:
US Large Company Stocks - Fundamental 11%
US Large Company Stocks 9%
US Small Company Stocks - Fundamental 8%
International Developed Large Company Stocks - Fundamental 8%
International Developed Large Company Stocks 5%
International Emerging Market Stocks - Fundamental 5%
US Small Company Stocks 4%
International Developed Small Company Stocks - Fundamental 4%
International Developed Small Company Stocks 3%
etc

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Tue May 23, 2017 12:40 am

OP,
There are 24 different IPs . You could choose a Muni version IP for your taxable IP. For aggressive IP (for stocks > 70%), cash drag is minimum and cash and HYG/JNK aggresive bonds balance out

You can ask Schwab to send you performance of IPs - they dont publish it but you can ask them to email you.
pkcrafter wrote:David, you didn't actually say what type of accounts those funds are in, IRA, taxable or both? Retiredjg's comment is relevant. I don't think the stock funds (too many) or bond funds (very tax In-efficient) are suitable for a taxable account. How often are they rebalancing the equity funds?

Paul

retiredjg
Posts: 33554
Joined: Thu Jan 10, 2008 12:56 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by retiredjg » Tue May 23, 2017 6:36 am

confusedinvestor wrote: You could choose a Muni version IP for your taxable IP.
So, they do have something more appropriate for a high income investor.

I have been unable to find the different lists. I guess you have to sign in or something. What does a muni version look like? Could a person use a state muni?

Coato
Posts: 112
Joined: Wed Oct 21, 2015 4:34 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by Coato » Tue May 23, 2017 8:14 am

We looked at this and would have done it if we didn't have 403bs and 457bs which basically nullify the simplicity of the SIP portfolios.

What we had set up was the SIP option where it was 94% equities and 6% cash. We were just going to hold the Schwab Treasuries etf (.06 ER I think) as a separate holding to make it 75-25, and a pretty simple two-fund-like operation. The SCHWAB muni was way too expensive and I like the Swensen/Swedroe thinking on treasuries. (25% tax bracket)

We were comfortable with the cash holding of 6%, and liked the Fundamental Indexes and thought they represented a pretty cheap gamble that those guys were either right, or not too wrong. I think that Investor Junkie has a post where they look at the total cost of the Schwab counting the ERs and the cash drag vs Betterment and Wealthfront and I think they calculate Schwab at .4 and Betterment at .39. Schwab didn't have the functionality of Betterment, but I am sure they will, and you don't have to worry that they are going to sell themselves to Blackrock or something 5 years from now.

If you are a tinkerer and prone to behavioral costs (I am) than any extra tax costs from the 5% of your portfolio in REITS in taxable probably is better than whatever percentage you'd pay for impulsively acting. When people talk about tax efficiency here I wonder how much it REALLY matters.

If we were 94/6 plus a Treasury ETF our cost would be somewhere around .3, or three times as expensive as a three fund. That is only about $3000 vs $1000 on a million dollar portfolio. You sacrifice some tax efficiency and get Tax Loss Harvesting and the tilt to small and value for that. It's just a matter of whether it is worth it to you or not.

davidkw
Posts: 794
Joined: Sun Feb 25, 2007 6:39 pm
Location: Northern VA

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by davidkw » Tue May 23, 2017 3:34 pm

With Schwab, you can remove three asset classes. I would remove the US large cap and International large cap Fundamentals.
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

Malinois000
Posts: 128
Joined: Sun Feb 26, 2017 6:08 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by Malinois000 » Tue May 23, 2017 5:33 pm

I help my sister and we rolled over one of her IRA's as we were looking for low fees and she is not interested in managing her investments. She rolled over the account in October 2016...It has performed fairly well so far.

Go Terps!!! My daughter attended Univ Maryland.

Explorer
Posts: 135
Joined: Thu Oct 13, 2016 7:54 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by Explorer » Tue May 23, 2017 8:01 pm

davidkw wrote:With Schwab, you can remove three asset classes. I would remove the US large cap and International large cap Fundamentals.
You can NOT remove 3 asset classes - all you can do is to exclude 3 specific ETFs.

Explorer
Posts: 135
Joined: Thu Oct 13, 2016 7:54 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by Explorer » Tue May 23, 2017 8:04 pm

Doubleeagle4me wrote:Have had a good chunk of money in it for over a year and a half. I was skeptical at first and would be the first to get out of it
If it didn't perform. All I can say is it outperforms. It's up a little over 7% this year. Something to be said about robot trading.
Takes all the emotion out of it. Staying the course for now.
Me too. It has exceeded my expectations of a robo-adviser. There is a reason why Schwab Intel port has AUM in excess of $5B.

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Tue May 23, 2017 8:30 pm

No, please see this

https://intelligent.schwab.com/public/i ... asses.html

Investment Grade Municipal Bonds
Investment Grade California Municipal Bonds

I live in CA, so I use CA Muni funds, you have 2 choice of CA Muni and 2 choice of National Muni, no other state specific sadly.
retiredjg wrote:
confusedinvestor wrote: You could choose a Muni version IP for your taxable IP.
So, they do have something more appropriate for a high income investor.

I have been unable to find the different lists. I guess you have to sign in or something. What does a muni version look like? Could a person use a state muni?

greybus
Posts: 68
Joined: Mon Mar 25, 2013 10:13 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by greybus » Tue May 23, 2017 8:37 pm

Explorer wrote:Me too. It has exceeded my expectations of a robo-adviser. There is a reason why Schwab Intel port has AUM in excess of $5B.
Actually Schwab Intelligent Portfolios has $16 billion AUM as of 3/31/17. This doesn't include their new offering, Schwab Intelligent Advisory, which charges an actual advisory fee for access to a live person. Of course, Vanguard PAS has $65 billion AUM. The largest stand-alone robo Betterment, which has been around much longer, only has $8.9 billion AUM. Both Vanguard and Schwab benefit from an established brand and existing clients who transferred assets over internally. But still, the robo advisor business is nothing to sneeze at, which most major players now making a play.

http://riabiz.com/a/2017/5/9/vanguard-r ... onthly-13b

If you are going to be putting the money solely into a tax protected account, you should consider Schwab Target Index funds

They are only offering the institutional shares now, with an ER of 0.08, and a minimum purchase of $100. They hold very little cash compared to SIP (for example, only 0.5% cash for Target 2060, rises to 1.1% at 2045, 2.1% at 2035, 3.7% at 2025, and it rises to only 7% cash for Target 2010-income fund). It lacks the fundamental/slice and dice bent of SIP.

If you are feeling particularly adventurous, I also feel obliged to name drop Wisebanyan (with whom I have an account but no other affiliation). They charge no fees for basic roboadvice and can buy in fractional shares and set goal based targets (buckets) like Betterment. However if you want tax loss harvesting, you have to pay an extra fee of 0.25% (capped at $20 per month) - but if you're going to be in a tax protected account, then this is irrelevant. Of course, there is concern they do not have a sustainable business model and will go under or be bought out, but their claim is to bring basic free roboadvice to the masses and I would like them to succeed.

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Tue May 23, 2017 8:40 pm

How do you calculate .3 ? Is that weighted average of ER of your 94 SIP ?

I have half of my taxable in SIP and half in Schwab TDR funds which ER = 0.08

Schwab TDR - Institutional Shares are available to Retail now, what a real deal ? Vanguard is 2x expensive for Investor shares.

http://www.schwab.com/public/schwab/inv ... rget_funds
Coato wrote:
If we were 94/6 plus a Treasury ETF our cost would be somewhere around .3, or three times as expensive as a three fund. That is only about $3000 vs $1000 on a million dollar portfolio. You sacrifice some tax efficiency and get Tax Loss Harvesting and the tilt to small and value for that. It's just a matter of whether it is worth it to you or not.

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Tue May 23, 2017 8:46 pm

Why should I only consider Schwab TDR Index Inst Shares in Tax protected account ?

Sorry, I am new so I am just asking to understand this.

I do have Schwab SIP, SIA and Self Directed (with TDR Index Inst Shares)

SIA is a tad bit better vs VPS. SIA used MoneyGuidePro. Best financial software in the market now is eMoney and new Right Capital.
greybus wrote: If you are going to be putting the money solely into a tax protected account, you should consider Schwab Target Index funds

.

greybus
Posts: 68
Joined: Mon Mar 25, 2013 10:13 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by greybus » Tue May 23, 2017 9:10 pm

confusedinvestor wrote:Why should I only consider Schwab TDR Index Inst Shares in Tax protected account ?
You can surely use the Target Date fund in a taxable account but I would suggest you know what you are gaining and giving up. By using the fund, you are gaining simpicity/set and forget. But you are losing the ability for TLH.

If you have your portfolio split between taxable and tax-protected accounts, then you can optimize tax efficient placement of your funds. If you have everything in a target date or all-in-one fund, you are unable to split up the individual parts. Then again, that also applies to the robo-advisor in that you (usually) cannot allocate your entire portfolio tax-efficiently across all of your accounts automatically, simply because no one provider has access to all of your accounts. In this case, DIY (or a paid live advisor) would probably be needed for this (although I believe at least FutureAdvisor will advise across all accounts, but I'm not sure if they will manage them all). of course a robo-advisor can TLH in taxable.

If you invest in a Target Date fund that becomes progressively more conservative over time (that is, higher % of bonds/cash) in a taxable account, then the fund becomes more tax inefficient over time (not withstanding the notion that "bonds go in tax protected" has been debated recently). Also, if you decided you didn't like the asset allocation or the glide path and wanted to exchange either into a different target date or sell many years down the road, you would likely incur large capital gains.

greybus
Posts: 68
Joined: Mon Mar 25, 2013 10:13 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by greybus » Tue May 23, 2017 9:18 pm

confusedinvestor wrote:How do you calculate .3 ? Is that weighted average of ER of your 94 SIP ?
This is an old post I made several years ago. It has a link to a public Google Docs you can download for yourself, where I listed the ER for many different roboadvisors, as well as the weighted average ER for different portfolios. It is slightly outdated now since some ER have changed and some of the portfolio percentages have changed. You are welcome to download it and modify for your own use.

viewtopic.php?f=10&t=160555&start=200#p2420538

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Tue May 23, 2017 9:40 pm

Yes, Is there any solution to this problem, except DIY 3 Fund portfolio with complex manual yearly re-balance ?

Is there a Index TDR Fund with only Munis / Tax efficient ?

Does Vanguard has a Tax Efficient 1 Fund with Auto Glide and TLH ?

I'm willing to let go yields b/c of tax in-efficently b/c I think (over long term for non technical folks like me), All-on-one fund, Auto Glides, Auto-Rebalance, Monthly Auto Investments with TDR will address the most important drag - which is investor's behavior, emotions, discipline, and consistency.

greybus wrote: Also, if you decided you didn't like the asset allocation or the glide path and wanted to exchange either into a different target date or sell many years down the road, you would likely incur large capital gains.

greybus
Posts: 68
Joined: Mon Mar 25, 2013 10:13 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by greybus » Tue May 23, 2017 10:58 pm

confusedinvestor wrote:Yes, Is there any solution to this problem, except DIY 3 Fund portfolio with complex manual yearly re-balance ?
A yearly rebalance is not complex at all, and many on this forum will say it takes 15 minutes, a spreadsheet and some grade school math. That is assuming you are not adding or withdrawing constantly throughout the year. If you are still accumulating, you'd have to spend more time rebalancing every time you buy shares, to optimize your allocation by buying what is low. Note that if you're set up to DCA monthly you'd probably have to rebalance every 1-2 years or you'd eventually shift out of your preferred allocation and take on more/less risk than you intended.
confusedinvestor wrote:I do have Schwab SIP, SIA and Self Directed (with TDR Index Inst Shares)
Why do you have SIP as well as SIA? You could potentially run into wash sales, as my understanding was that SIA uses the same funds as SIP unless I'm mistaken? I thought they are essentially the same, except with SIA, you're paying 0.28% for an advisor.
confusedinvestor wrote:Does Vanguard has a Tax Efficient 1 Fund with Auto Glide and TLH ?
Can't TLH if it's an All-in-one fund. You have to own the different funds/ETFs yourself. Vanguard does have the Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX) that you can look at, but it's a fixed allocation, no Glide path and other differences in composition.
confusedinvestor wrote:I'm willing to let go yields b/c of tax in-efficently b/c I think (over long term for non technical folks like me), All-on-one fund, Auto Glides, Auto-Rebalance, Monthly Auto Investments with TDR will address the most important drag - which is investor's behavior, emotions, discipline, and consistency.
Based on your statement above, I believe SIP, SIA or TDR would be a better option than DIY for you. DIY is not that hard to learn, and many BH here would encourage you to learn more about your investments rather than use a roboadvisor, but I get that some people just don't want to manage their own investments/emotions. I personally use a robo, but for convenience (I have posted before about the different in accumulation phase vs retirement phase, where accumulation phase might require deposit/rebalancing every 2 weeks vs 15 minutes/yr in the retirement phase).

If you value the ability to talk to a live advisor anytime or will use the financial plan an advisor might provide, and think it's worth 0.28%, go with SIA [they cap fees at $3600/yr, so if you have a very large portfolio, the % fee starts to drop].

If you want the fundamental/small cap tilt and ability to TLH and don't mind potentially holding a lot of cash, and are OK with all online but don't need the live person, go with SIP

If you want basic simplictiy, set-it and forget it fund, and are willing to forgo some of the finer details, go with the TDR Index (but make sure you know what's in the actual fund, the glide path, and the asset allocations before you go pick one).

Of course, as you alluded, you could have some of both (although I'm still not sure you should have both SIP and SIA)

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Wed May 24, 2017 1:10 am

greybus,

thank you so such a nice detailed response. I've following b/c:

-- SIA - Only 25K required-minimum, so fees = 0.28 = $60/yr to get access of MoenyGuidePro (Planning Software); Unlimited CFPs (altough not impressed with Schwab CFPs), Bonds CA Muni --- Note, I'm not contribution a single $1 extra as I dont want to pay the .28 fees beyond Funds ERs

-- SIP - 50K + $250/Month-DCA 85:15 - Bonds: CA Muni
Note SIA, SIP have same SIPs so all portfolios are TLH co-ordinated

-- DIY-1 - 50K Wife's $ in Index TDR 2030 - Pros: All-1-fund, AutoGlide, No Rebalance, only 0.08 ER Cons: No TLH, High Bonds in Taxable
- Note; Wife doesnt want to get into like 2008 so I chose TDR with Glide for her

-- DIY-2 - 50K My $ - 4 Fund Schwab - Total, Int, Small-Blend Tilt, Muni - Set up Auto Investment Plan using quarterly deposit

Does this make sense? Is it better to liquidate the TDR and just do 4 Fund Schwab instead ?

Recently we have hired a financial advisor for a fixed fee only to review all our plans, finances, insurances etc. thanks again for such a helpful detailed response ! Appreciated ...
greybus wrote:
Of course, as you alluded, you could have some of both (although I'm still not sure you should have both SIP and SIA)

Coato
Posts: 112
Joined: Wed Oct 21, 2015 4:34 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by Coato » Wed May 24, 2017 7:14 am

confusedinvestor wrote:How do you calculate .3 ? Is that weighted average of ER of your 94 SIP ?

I have half of my taxable in SIP and half in Schwab TDR funds which ER = 0.08

Schwab TDR - Institutional Shares are available to Retail now, what a real deal ? Vanguard is 2x expensive for Investor shares.

http://www.schwab.com/public/schwab/inv ... rget_funds
Coato wrote:
If we were 94/6 plus a Treasury ETF our cost would be somewhere around .3, or three times as expensive as a three fund. That is only about $3000 vs $1000 on a million dollar portfolio. You sacrifice some tax efficiency and get Tax Loss Harvesting and the tilt to small and value for that. It's just a matter of whether it is worth it to you or not.
I was spitballing, not calculating... If Investor Junkie is right and (INCLUDING the cash drag) the Schwab mix costs about .4 and if I mix that three parts SIP to one part super cheap Schwab "General US Treasury" ETF (.06) you end up at around .3...

My only point is that it would probably be more tax efficient to try and minimize the Fixed Income part of the SIP and just maintain a separate Bond Allocation to Treasuries (no state tax) or Muni (no fed tax, no state tax too if you use CA).

It would be fairly tax efficient with only the REIT part (5%) being inefficient.

greybus
Posts: 68
Joined: Mon Mar 25, 2013 10:13 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by greybus » Wed May 24, 2017 10:01 am

confusedinvestor wrote:-- SIP - 50K + $250/Month-DCA 85:15 - Bonds: CA Muni
Do you mind actually listing the asset classes and the % in each one? When I tried to replicate the 85-15 portfolio in SIP (without an account, but told them to use Ca Muni), it gave me the following (with no Ca Muni)

[Stocks 85%]
US Large Company Stocks - Fundamental 16%
International Developed Large Company Stocks - Fundamental 12%
US Large Company Stocks 11%
US Small Company Stocks - Fundamental 10%
International Developed Large Company Stocks 8%
US Small Company Stocks 6%
International Developed Small Company Stocks - Fundamental 5%
International Emerging Market Stocks - Fundamental 5%
International Developed Small Company Stocks 4%
International Emerging Market Stocks 3%
US Exchange-Traded REITs 3%
International Exchange-Traded REITs 2%

International Emerging Market Bonds 3%
US Corporate High Yield Bonds 2%
Gold and Other Precious Metals 3.1%
Cash 6.9%



The next two more conservative portfolios (77% and 69% stock) also do not have Muni as an option. Only when you get down to 65% stock do I see Munis showing up and even then it's only a portion of your fixed income. Does SIA allow you to override that allocation?

[Stocks 65%]
US Large Company Stocks - Fundamental 11%
US Large Company Stocks 9%
US Small Company Stocks - Fundamental 8%
International Developed Large Company Stocks - Fundamental 8%
International Developed Large Company Stocks 5%
International Emerging Market Stocks - Fundamental 5%
US Small Company Stocks 4%
International Developed Small Company Stocks - Fundamental 4%
International Developed Small Company Stocks 3%
International Emerging Market Stocks 3%
US Exchange-Traded REITs 3%
International Exchange-Traded REITs 2%

US Corporate High Yield Bonds 8%
International Emerging Market Bonds 7%
Investment Grade Municipal Bonds 4%
International Developed Country Bonds 2.5%
Gold and Other Precious Metals 5%
Cash 8.5%

User avatar
House Blend
Posts: 4483
Joined: Fri May 04, 2007 1:02 pm

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by House Blend » Wed May 24, 2017 10:11 am

confusedinvestor wrote:Is there a Index TDR Fund with only Munis / Tax efficient ?

Does Vanguard has a Tax Efficient 1 Fund with Auto Glide and TLH ?
FWIW, tax exempt bonds held inside a mutual fund lose their Federal tax exemption unless those bonds represent at least 50% of the assets. (And that's why VG Tax Managed Balanced targets a 50:50 allocation.)

Yes, fund providers could offer a tax-efficient target date fund that uses munis, but the glide path would have to stay at or below 50% equity. Perhaps the market for that is not big enough. The market would be further splintered by those in high tax states wanting to take advantage of state-specific munis.

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Thu May 25, 2017 1:01 am

Sorry for the delay in responding, looks like i was wrong.

For my 85:15, I dont have MUNIs

For fixed I have :

Fixed Income (5.14%)
International Emerging Market Bonds 3.10 %
US Corporate High Yield Bonds 2.04 %
Gold and Other Precious Metals 3.19 %
Cash (6.65%)


They said MUNI only make sense when i will have large fixed income allocation, sorry for the confusion

Nope, I dont think SIA will allow for any overrides except swap out Etfs on same assest classes and they have 12 different SIP AA.
greybus wrote:
confusedinvestor wrote:-- SIP - 50K + $250/Month-DCA 85:15 - Bonds: CA Muni
Do you mind actually listing the asset classes and the % in each one? When I tried to replicate the 85-15 portfolio in SIP (without an account, but told them to use Ca Muni), it gave me the following (with no Ca Muni)

[Stocks 85%]
US Large Company Stocks - Fundamental 16%
International Developed Large Company Stocks - Fundamental 12%
US Large Company Stocks 11%
US Small Company Stocks - Fundamental 10%
International Developed Large Company Stocks 8%
US Small Company Stocks 6%
International Developed Small Company Stocks - Fundamental 5%
International Emerging Market Stocks - Fundamental 5%
International Developed Small Company Stocks 4%
International Emerging Market Stocks 3%
US Exchange-Traded REITs 3%
International Exchange-Traded REITs 2%

International Emerging Market Bonds 3%
US Corporate High Yield Bonds 2%
Gold and Other Precious Metals 3.1%
Cash 6.9%



The next two more conservative portfolios (77% and 69% stock) also do not have Muni as an option. Only when you get down to 65% stock do I see Munis showing up and even then it's only a portion of your fixed income. Does SIA allow you to override that allocation?

[Stocks 65%]
US Large Company Stocks - Fundamental 11%
US Large Company Stocks 9%
US Small Company Stocks - Fundamental 8%
International Developed Large Company Stocks - Fundamental 8%
International Developed Large Company Stocks 5%
International Emerging Market Stocks - Fundamental 5%
US Small Company Stocks 4%
International Developed Small Company Stocks - Fundamental 4%
International Developed Small Company Stocks 3%
International Emerging Market Stocks 3%
US Exchange-Traded REITs 3%
International Exchange-Traded REITs 2%

US Corporate High Yield Bonds 8%
International Emerging Market Bonds 7%
Investment Grade Municipal Bonds 4%
International Developed Country Bonds 2.5%
Gold and Other Precious Metals 5%
Cash 8.5%

slyboots
Posts: 5
Joined: Sat Dec 03, 2016 5:37 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by slyboots » Thu May 25, 2017 7:05 am

Hi. I've been using Schwab Intelligent Portfolios for the last 1.5 years in both tax-deferred and taxable accounts. It's now my exclusive destination for new funds and I am deep into the accumulation phase (43yo). I really like it!

Here's my rationale:

Why a robo-advisor?
  • As a former active trader and investor, I need something that prevents me from meddling with my portfolio. Even a three- or four-fund setup leaves too much room for temptation to tinker with the asset allocation or securities.
    Automated rebalancing and tax loss harvesting is really helpful for me, as a busy professional.
    I like the convenience of being able to have a single place to deposit savings. The computer takes care of the rest.
Why Schwab?
  • Convenience - all my financial assets are already at Schwab. I deposit money from my bank account into another brokerage account I have with Schwab as a "buffer zone", and then when I am convinced I don't actually need the money, I shift to the SIP account.
    Fees - I did a rigorous analysis of fees and I concluded that even with the cash "drag" (which you can argue isn't a drag at all), the all-in cost of the SIP product is lower than that of Betterment or Wealthfront.
    Asset allocation - I liked the wide diversification they offered because I have a fundamental belief that nobody knows anything about investment so broad diversification is the way to go (and I say this as a former Wall Street professional). Yes, I am now a gold bug thanks to Schwab.
    Security choice - this is the one thing I quibble with - I'm not a huge fan of some of their ETF choices but all in all they are not bad. I don't mind fundamental indexes because, as mentioned earlier, nobody knows anything so they could outperform or underperform and I have no valid prospective view on this. If this is the price I have to pay to use the service, fine.
I'd be happy to share my portfolio and performance if requested.

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Thu May 25, 2017 8:59 am

thank you.

1. We will appreciate if you please share your SIP performances.

2. I do have SIP, SIA, Self (Schwab new Index TDR funds, 7 Assest Classes, no cash drag with Glides, darn checp 0.08 ER), Self (4 Fund) at Schwab and I cant decide what is best ...

Do you have other non SIP accounts at Schwab ? or all SIPs?

Cash drag is over blown - cash is 0 coupon bonds. and I'm find paying the 'drag' as fees - Fundamental Index did really well 2016, non one knows what will be in future, so diversification on indexes itself is not that bad....

slyboots wrote:Hi. I
Fees - I did a rigorous analysis of fees and I concluded that even with the cash "drag" (which you can argue isn't a drag at all), the all-in cost of the SIP product is lower than that of Betterment or Wealthfront.


I'd be happy to share my portfolio and performance if requested.

davidkw
Posts: 794
Joined: Sun Feb 25, 2007 6:39 pm
Location: Northern VA

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by davidkw » Thu May 25, 2017 2:50 pm

Why a robo-advisor?
As a former active trader and investor, I need something that prevents me from meddling with my portfolio. Even a three- or four-fund setup leaves too much room for temptation to tinker with the asset allocation or securities.
Automated rebalancing and tax loss harvesting is really helpful for me, as a busy professional.
I like the convenience of being able to have a single place to deposit savings. The computer takes care of the rest.
Why Schwab?
Convenience - all my financial assets are already at Schwab. I deposit money from my bank account into another brokerage account I have with Schwab as a "buffer zone", and then when I am convinced I don't actually need the money, I shift to the SIP account.
Fees - I did a rigorous analysis of fees and I concluded that even with the cash "drag" (which you can argue isn't a drag at all), the all-in cost of the SIP product is lower than that of Betterment or Wealthfront.
Asset allocation - I liked the wide diversification they offered because I have a fundamental belief that nobody knows anything about investment so broad diversification is the way to go (and I say this as a former Wall Street professional). Yes, I am now a gold bug thanks to Schwab.
Security choice - this is the one thing I quibble with - I'm not a huge fan of some of their ETF choices but all in all they are not bad. I don't mind fundamental indexes because, as mentioned earlier, nobody knows anything so they could outperform or underperform and I have no valid prospective view on this. If this is the price I have to pay to use the service, fine.
For the stocks in the Schwab Robo Advisor? Do you get a tax bill? For Vanguard's Total Stock Market, I get 100% qualified dividends, so no taxes until I sell.

How may 1099s do you get from Schwab for the Robo Advisor?

Vanguard always send out the 1099s in mid January. I have one Schwab fund and it usually comes in mid February. However, this year it came in late January.
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

slyboots
Posts: 5
Joined: Sat Dec 03, 2016 5:37 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by slyboots » Thu May 25, 2017 9:03 pm

@confusedinvestor:

Performance: I have two SIP accounts, one taxable and one IRA. I am in the 77% equities asset allocation.
CY2016- 11.46-11.54%
YTD - 7.4-7.6%
(Difference is due to timing of contributions)

And yes, I do have several non SIP accounts at Schwab. Like I said, I am a former active investor and while I enjoyed the intellectual challenge, I appreciate being able to focus more on making and saving money rather than buying and selling securities. I'm a big fan of the SIP product.

@davidkw:

For my SIP account I do get a single 1099 with interest, dividends, and capital gains. With respect to capital gains, last year the tax loss harvesting algorithm managed to generate a short-term capital loss for me of about 2% of my entire portfolio value.

Hope this is helpful, guys.

User avatar
Voltron
Posts: 85
Joined: Wed Apr 26, 2017 10:00 pm
Location: California

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by Voltron » Thu May 25, 2017 10:09 pm

davidkw wrote:Is anyone using the Schwab Intelligent Portfolio?
Yes I use it. No it is not excellent for taxable accounts. It is below average and while it has been interesting, fun, and educational, I'm ready to transfer to Vanguard and sell or close the account.

Three months ago I put $100,000 in Vanguard taxable with total stock and Total international and $100,000 in Schwab IP taxable. Here is what I have learned:

1. Schwab IP not that smart. Tax inefficient placement of bonds. Junk bonds? Really? REIT?
2. Fees. Run on Personal Capital app and your annual ETF expense ratio fees will be almost double Vanguard. Still decent but imagine holding thousands of dollars over the years.
3. Cash drag (don't mind this that much actually). It's overblown. Many managed funds have some cash in them already so this isn't that much different. I'd take this over additional fees.
4. Don't like REIT or gold in holdings? Tough. Can't get rid of them. You could fiddle with the questionnaire so eventually it allocates you to all stocks which is what I'm doing right now. That is the work around.
5 Schwab has great telephone and online chatting service
6. Total stock with Total international Vanguard vs Schwab IP all stock allocation. Performance comparable. The expense ratio is the difference. Again I think performance comparable.
7. Schwab IP app is fun to watch grow. Great interface though details I find in Vanguard interface are missing.
8. Municple bonds never happened when I chose them.
9. Tax loss harvesting seems overrated but I never got to encounter them with my initial allocation I set.

These issues are small if you have 5,000 in the account but try to run 100,000 dollars or more over the years and it does add up.

My Backdoor Roth IRA is also Schwab IP. I also regret but I think I can convert that to a self directed account. My work tax deferred accounts are Schwab.

I like Schwab. If someone can prove me wrong that my money is better at Schwab, please do. Otherwise it very, very convenient! I literally sent my letter in mail today before finding this post to transfer my Schwab IP to Vanguard.

confusedinvestor
Posts: 417
Joined: Thu Mar 15, 2012 11:04 am

Re: Is Schwab Intelligent Portfolio OK for taxable accounts???

Post by confusedinvestor » Thu May 25, 2017 11:50 pm

Yes, very helpful. thank you.

I am new.. so can you explain how SIP is able to do 2% short-term capital loss yet your portfolio gained 11% in CY2016 ?

So this mean TLH automation in SIP is a clear better value vs manual self TLH in Vanguard/Schwab 3F self portfolio ?

I am confused again.

slyboots wrote:@confusedinvestor:



For my SIP account I do get a single 1099 with interest, dividends, and capital gains. With respect to capital gains, last year the tax loss harvesting algorithm managed to generate a short-term capital loss for me of about 2% of my entire portfolio value.

.

Post Reply