Schwab Intelligent Portfolio vs. Schwab Target Fund

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Mon Jun 04, 2018 2:57 pm

That's an approach I had not thought of.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Mon Jun 04, 2018 5:32 pm

MnD wrote:
Mon Jun 04, 2018 8:53 am
lhwerdyt*1791c wrote:
Mon Jun 04, 2018 1:22 am
MnD wrote:
Sun Jun 03, 2018 8:43 am
retiredjg wrote:
Tue May 29, 2018 7:24 am
Did you find that the SIP offers you something you want that the Target Date Index fund does not offer? If not, I'd just go with the target fund. If it ever migrates to a position that is too conservative for you, just exchange it (or part of it) to the next less aggressive date.

Nothing stood out to me in what you wrote, but you are the one who needs to be satisfied with what you buy. If there is something you like about the SIP, I don't see how it could be a bad choice as long as it is free. However, we've observed that several other Robos change things up a bit so do keep an eye on it to make sure it stays want you want.

Rebalance vs reallocate - I think that just probably means you rebalance between separate things (between the ETFs) and reallocation means changing the balance of things within one thing (within the one fund).
I agree - I think either is fine but the target date index funds would have fewer moving parts and much easier to undo than direct ownership of a basket of ETF's via robo-advisor. Per the latest target index funds prospectus the net ER is now contractually 0.08% for as long as Schwab Investment Management Inc. remains the fund advisor. This reduction of ER .05% effectively rebates 100% of the acquired funds ER's (.05%). The small amount of cash is invested in Schwab Ultra Money Market series which is their lowest cost and highest yielding MM product and would require $1M minimum for an individual investment. The advisor is bound to a fiduciary standard.
We feel most comfortable with the TDI fund approach for the same reasons, i.e., fewer moving parts and easier to undo. Thank you for the prospectus info, too. We will watch for any increase in ER.

How does the $1M minimum relate to the Schwab TDI fund?

What determines whether an advisor (Schwab, here, correct?) is bound to a fiduciary standard?
The ER should not be increasing. The prospectus states it will remain at net .08% as long as Schwab Investment Management is the investment manager. Unlikely that Schwab would stop managing their own fund. Of course.

The small cash portion of the fund is in the highest yielding "Ultra"class of Schwab money-market funds. If you as an individual wanted access to that same MM fund class you would need a minimum investment of $1M. Its just an aside. people mention the cash drag in Schwab funds so I was curious what the cash was in. Understood. Another aside: From what we read, Schwab's SIP cash gets only "bank" interest; another cash disadvantage of the SIP if that's important to an investor.

I believe all investment advisors are bound to a fiduciary standard to the mutual fund they are advising, but I did see it stated explicitly in the prospectus for this fund. Thanks!

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Mon Jun 04, 2018 5:43 pm

retiredjg wrote:
Mon Jun 04, 2018 2:38 pm
lhwerdyt*1791c wrote:
Mon Jun 04, 2018 2:23 am
First, I spoke with Schwab tonight re: any fees for buying a Vanguard TD fund from the Schwab account.

S charges $76 to buy, $0 to sell if it's a mutual fund. No "fee" if Schwab offers an ETF equivalent fund except for $4.95 cost; not sure if that's $4.95 once or when selling, too. I couldn't find a Schwab TD EFT; was looking in particular for a LifeStrategy (LS) fund. Assuming there are truly no LS ETfs equivalents, then seems she would have to have to move her current Schwab 2020 $ into a Schwab and/or Vanguard three-fund at a 60(B)/40(S) allocation, and rebalance every year, for ex. She's open to that, and knows she and I know she needs to get on with this. Any suggestions?
I think there is a misunderstanding. There are no fees to buy or sell the Target Date funds at Schwab. At least, that is how I read the website.

Well, the Schwab rep told me last night that the fee(s) applied to buying a Vanguard Target Date fund(s) at Schwab at least that's what I understood. But I'll verify.
This brings up another related question.

My friend is also considering keeping Prudential Stable Value funds at Pru and moving the rest to the Schwab retirement account to achieve a 60%(FI)/40%(S) allocation between the two custodians. Two custodians not Bogle-ideal as discussed but she likes the 3% 6-month rate (good till July 1, 2018). The 60% would be fixed income at Prudential and the 40% would be equities in a Schwab total market equity (?) fund.

Why do you think? If she did this, is there a Schwab (or Vanguard) total market equity fund that she might consider?
It won't work because there would be no way to rebalance. Not sure why a two-fund split can't be rebalanced. If she wants to go this route, she should try to leave 50% at Prudential in the stable value fund and put 10% into a Schwab Total Bond Index and 40% into the Schwab Total Stock Index. Thank you! That works!

retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Mon Jun 04, 2018 5:53 pm

lhwerdyt*1791c wrote:
Mon Jun 04, 2018 5:43 pm
Well, the Schwab rep told me last night that the fee(s) applied to buying a Vanguard Target Date fund(s) at Schwab at least that's what I understood. But I'll verify.
Yes, a fee would apply to buying Vanguard funds at Schwab. I meant there should be no fee to buy a Schwab Index Target fund at Schwab.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

lifestrategy

Post by lhwerdyt*1791c » Mon Jun 04, 2018 6:12 pm

retiredjg wrote:
Mon Jun 04, 2018 5:53 pm
lhwerdyt*1791c wrote:
Mon Jun 04, 2018 5:43 pm
Well, the Schwab rep told me last night that the fee(s) applied to buying a Vanguard Target Date fund(s) at Schwab at least that's what I understood. But I'll verify.
Yes, a fee would apply to buying Vanguard funds at Schwab. I meant there should be no fee to buy a Schwab Index Target fund at Schwab.
rixer wrote:
Mon Jun 04, 2018 2:47 pm
I'm with Schwab and use Vanguard Lifestrategy in all accounts. Since I'm retired and don't contribute anymore, there was only a one time fee for purchasing and now we only sell as needed with NO fee at all. Works great for us so far.
thank you!

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: lifestrategy

Post by lhwerdyt*1791c » Mon Jun 04, 2018 6:13 pm

lhwerdyt*1791c wrote:
Mon Jun 04, 2018 6:12 pm
retiredjg wrote:
Mon Jun 04, 2018 5:53 pm
lhwerdyt*1791c wrote:
Mon Jun 04, 2018 5:43 pm
Well, the Schwab rep told me last night that the fee(s) applied to buying a Vanguard Target Date fund(s) at Schwab at least that's what I understood. But I'll verify.
Yes, a fee would apply to buying Vanguard funds at Schwab. I meant there should be no fee to buy a Schwab Index Target fund at Schwab. Ok!
rixer wrote:
Mon Jun 04, 2018 2:47 pm
I'm with Schwab and use Vanguard Lifestrategy in all accounts. Since I'm retired and don't contribute anymore, there was only a one time fee for purchasing and now we only sell as needed with NO fee at all. Works great for us so far.
thank you!

Creditcardguy
Posts: 30
Joined: Fri May 25, 2018 7:23 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by Creditcardguy » Mon Jun 04, 2018 7:34 pm

Coincidentally, I just talked to Schwab about the Intelligent Portfolio today - actually he brought it up. Two main benefits are tax loss harvesting and rebalancing. I'm thinking I can do that myself, but the costs have come down, he says they're in a price war with Vanguard. The weighted average annual operating expense ratio is:

Conservative: .06
Moderate: .15
Aggressive: .20

(as of 10/30/2017)

billthecat
Posts: 231
Joined: Tue Jan 24, 2017 2:50 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by billthecat » Tue Jun 05, 2018 8:58 pm

lhwerdyt*1791c wrote:
Mon Jun 04, 2018 1:35 am
billthecat wrote:
Sun Jun 03, 2018 11:43 am
lhwerdyt*1791c wrote:
Sun Jun 03, 2018 1:40 am
Hello, and thx for information. Can you brief explain what's involved in unwinding SIP?
Well, you have two choices: you can unwrap the funds, taking them out of your SIP account and moving them to a regular account, or liquidate the funds within SIP and transfer the proceeds to a regular account.

The first option means that when you sell, you may have to pay transaction costs, depending on the fund.

The second option takes more time because the proceeds are trapped in the SIP account until the transactions settle.

I went for option 2, without realizing how much longer it would take. I submitted the form to close the account Wednesday 11 a.m. ET, which was then "received" Thursday, and the account is scheduled to liquidate Monday, and settle Wednesday.
I would have chosen option 2, too. I can't see keeping just moving the SIP funds to a regular account if SIP isn't working for the investor in the first place (in a SIP account). But, again, my learning curve is steep. :confused

I'm assuming you didn't have to pay any transactions costs in option 2??
No, there are no transaction costs when using SIP.

I thought of a third option, which I should have done. I could have simply transferred the cash out of the SIP account, let it rebalance, transfer more, let it rebalance, transfer more, etc., etc. That method would have let me ease into my self-directed approach and smooth out any day to day market fluctuations during the transition. Oh well.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Tue Jun 05, 2018 9:25 pm

billthecat wrote:
Tue Jun 05, 2018 8:58 pm
lhwerdyt*1791c wrote:
Mon Jun 04, 2018 1:35 am
billthecat wrote:
Sun Jun 03, 2018 11:43 am
lhwerdyt*1791c wrote:
Sun Jun 03, 2018 1:40 am
Hello, and thx for information. Can you brief explain what's involved in unwinding SIP?
Well, you have two choices: you can unwrap the funds, taking them out of your SIP account and moving them to a regular account, or liquidate the funds within SIP and transfer the proceeds to a regular account.

The first option means that when you sell, you may have to pay transaction costs, depending on the fund.

The second option takes more time because the proceeds are trapped in the SIP account until the transactions settle.

I went for option 2, without realizing how much longer it would take. I submitted the form to close the account Wednesday 11 a.m. ET, which was then "received" Thursday, and the account is scheduled to liquidate Monday, and settle Wednesday.
I would have chosen option 2, too. I can't see keeping just moving the SIP funds to a regular account if SIP isn't working for the investor in the first place (in a SIP account). But, again, my learning curve is steep. :confused

I'm assuming you didn't have to pay any transactions costs in option 2??
No, there are no transaction costs when using SIP.

I thought of a third option, which I should have done. I could have simply transferred the cash out of the SIP account, let it rebalance, transfer more, let it rebalance, transfer more, etc., etc. That method would have let me ease into my self-directed approach and smooth out any day to day market fluctuations during the transition. Oh well.
But if a SIP client transfers the cash out of the SIP account, doesn't the rebalance process automatically move funds out of the non-cash fund mix and store the original allocation of cash holding? Or is that what you are saying; keep transferring until all is depleted?

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Tue Jun 05, 2018 10:21 pm

lhwerdyt*1791c wrote:
Mon Jun 04, 2018 5:43 pm
retiredjg wrote:
Mon Jun 04, 2018 2:38 pm
lhwerdyt*1791c wrote:
Mon Jun 04, 2018 2:23 am
First, I spoke with Schwab tonight re: any fees for buying a Vanguard TD fund from the Schwab account.

S charges $76 to buy, $0 to sell if it's a mutual fund. No "fee" if Schwab offers an ETF equivalent fund except for $4.95 cost; not sure if that's $4.95 once or when selling, too. I couldn't find a Schwab TD EFT; was looking in particular for a LifeStrategy (LS) fund. Assuming there are truly no LS ETfs equivalents, then seems she would have to have to move her current Schwab 2020 $ into a Schwab and/or Vanguard three-fund at a 60(B)/40(S) allocation, and rebalance every year, for ex. She's open to that, and knows she and I know she needs to get on with this. Any suggestions?
I think there is a misunderstanding. There are no fees to buy or sell the Target Date funds at Schwab. At least, that is how I read the website.

Well, the Schwab rep told me last night that the fee(s) applied to buying a Vanguard Target Date fund(s) at Schwab at least that's what I understood. But I'll verify.
This brings up another related question.

My friend is also considering keeping Prudential Stable Value funds at Pru and moving the rest to the Schwab retirement account to achieve a 60%(FI)/40%(S) allocation between the two custodians. Two custodians not Bogle-ideal as discussed but she likes the 3% 6-month rate (good till July 1, 2018). The 60% would be fixed income at Prudential and the 40% would be equities in a Schwab total market equity (?) fund.

Why do you think? If she did this, is there a Schwab (or Vanguard) total market equity fund that she might consider?
It won't work because there would be no way to rebalance. Not sure why a two-fund split can't be rebalanced. If she wants to go this route, she should try to leave 50% at Prudential in the stable value fund and put 10% into a Schwab Total Bond Index and 40% into the Schwab Total Stock Index. Thank you! That works!
Good evening,

I have three related questions.

1. Re: Schwab Total Bond Index

Per the much appreciated above suggestions re: 10% into the Schwab Total Bond Index (SWLGX, right?)...I couldn't find it listed at S.

Schwab's related "FAQs" on this explains that it liquidated SWLGX in 2017 and suggested two replacement options:
- Schwab US Aggregate Bond Index Fund (SWAGX), and
- Schwab Bond Intermediate Index Fund (SWSBX).

FYI: Schwab states: "With an eye to making its product offering consistent with its growing focus on index investing, CSIM (Schwab) launched two new index bond mutual funds on February 23, 2017 (Schwab Short-Term Bond Index Fund and Schwab U.S. Aggregate Bond Index Fund) and decided to liquidate its passive bond mutual funds (Schwab Short-Term Bond Market Fund and Schwab Total Bond Market Fund)."
Link: https://www.schwab.com/public/file/P-10309327

Question 1 : I discussed with my friend who believes she should go with the broader of the above two funds, which also makes sense to me. How does this sound?

2. Re: Schwab Total Stock Index
What I found for this is SWTSX.

Questions 2 Is this the same fund you were referring to, re: 40% allocation?
Question 3 If so, would Schwab U.S. Broad Market ETF be a reasonable alternative if she prefers an ETF?

Thank you!
LH

retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Wed Jun 06, 2018 6:09 am

lhwerdyt*1791c wrote:
Tue Jun 05, 2018 10:21 pm


1. Re: Schwab Total Bond Index

Per the much appreciated above suggestions re: 10% into the Schwab Total Bond Index (SWLGX, right?)...I couldn't find it listed at S.

Schwab's related "FAQs" on this explains that it liquidated SWLGX in 2017 and suggested two replacement options:
- Schwab US Aggregate Bond Index Fund (SWAGX), and
- Schwab Bond Intermediate Index Fund (SWSBX).
SWLGX is not the right ticker, but they used to have a "Total Bond" fund that (like you) people thought was a total bond index fund. But it was not and it performed poorly during the last market crash (it took a pretty good dip). They replaced it with a true index fund which is the one named "US Aggregate Bond Index Fund" (SWAGX). This is the fund I would suggest if your friend decides not to use the target fund approach.


2. Re: Schwab Total Stock Index
What I found for this is SWTSX.

Questions 2 Is this the same fund you were referring to, re: 40% allocation?
Yes.

Question 3 If so, would Schwab U.S. Broad Market ETF be a reasonable alternative if she prefers an ETF?
Yes.

billthecat
Posts: 231
Joined: Tue Jan 24, 2017 2:50 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by billthecat » Wed Jun 06, 2018 11:22 am

lhwerdyt*1791c wrote:
Tue Jun 05, 2018 9:25 pm
billthecat wrote:
Tue Jun 05, 2018 8:58 pm
lhwerdyt*1791c wrote:
Mon Jun 04, 2018 1:35 am
billthecat wrote:
Sun Jun 03, 2018 11:43 am
lhwerdyt*1791c wrote:
Sun Jun 03, 2018 1:40 am
Hello, and thx for information. Can you brief explain what's involved in unwinding SIP?
Well, you have two choices: you can unwrap the funds, taking them out of your SIP account and moving them to a regular account, or liquidate the funds within SIP and transfer the proceeds to a regular account.

The first option means that when you sell, you may have to pay transaction costs, depending on the fund.

The second option takes more time because the proceeds are trapped in the SIP account until the transactions settle.

I went for option 2, without realizing how much longer it would take. I submitted the form to close the account Wednesday 11 a.m. ET, which was then "received" Thursday, and the account is scheduled to liquidate Monday, and settle Wednesday.
I would have chosen option 2, too. I can't see keeping just moving the SIP funds to a regular account if SIP isn't working for the investor in the first place (in a SIP account). But, again, my learning curve is steep. :confused

I'm assuming you didn't have to pay any transactions costs in option 2??
No, there are no transaction costs when using SIP.

I thought of a third option, which I should have done. I could have simply transferred the cash out of the SIP account, let it rebalance, transfer more, let it rebalance, transfer more, etc., etc. That method would have let me ease into my self-directed approach and smooth out any day to day market fluctuations during the transition. Oh well.
But if a SIP client transfers the cash out of the SIP account, doesn't the rebalance process automatically move funds out of the non-cash fund mix and store the original allocation of cash holding? Or is that what you are saying; keep transferring until all is depleted?
Each time you transfer the cash out it rebalances, selling some of everything to create cash. So by continuously siphoning off the cash, you can deplete the account over time. Many more steps but smooths the transition.

yeahman
Posts: 33
Joined: Thu Mar 02, 2017 11:27 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by yeahman » Wed Jun 06, 2018 4:58 pm

Schwab's cash drag should be comparable to the fees of other roboadvisors but their disingenuous excuse for it makes me less likely to go with Schwab for my robo needs.

Nate79
Posts: 3043
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by Nate79 » Wed Jun 06, 2018 6:41 pm

For those that continue to erroneously mention that the SIP has a "cash drag" you should actually research the details of the actual fixed income allocation that SIP uses. There is no cash drag.

I did a quick evaluation of the yield of the example portfolio that Schwab has on this page:
https://intelligent.schwab.com/
It is a 30% fixed income allocation.
9% cash, 2% int developed bonds, 7% emerging bonds, 8% high yield bonds, 1% corporate bonds, 3% securitized bonds.

The funds they use are here:
https://intelligent.schwab.com/public/i ... asses.html

Based on this I looked at 2 options, one the SIP 30% fixed income allocation listed above and two, 30% to Vanguard total bond market.

The weighted 30 day SEC yield for the SIP is 3.7% and and TBM is 3%. --> So, SIP has a higher yielding fixed income asset allocation.

Point is that SIP uses modern portfolio theory to break up their portfolio by each different asset class and specifically for fixed income they have the cash (earning 0.5%) to offset the higher risk and higher yielding high yield and emerging market bonds.

4nwestsaylng
Posts: 251
Joined: Thu Jun 15, 2017 2:03 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by 4nwestsaylng » Thu Jun 07, 2018 12:34 am

JamesSFO wrote:
Sun Jun 03, 2018 9:06 am
I recently decided to give the Intelligent Portfolios a try (I'm 99% invested 3 fund) for two reasons (1) try out Schwab's customer service (so far middling to disappointing) and (2) because I was curious about the intelligent portfolio product.

I picked the most aggressive allocation and my weighted expense ratio 0.19% (vs 0.07% for rest of my portfolio) so a bit higher.

Having only been trying the product for <1 month it is hard to say much more about it. I think if I were going to do a roboadvisor (which I am :D) then picking Schwab for 0 additional direct fees (yes the cash drag) would be my choice.

(I don't find the cash drag that interesting because I usually have an emergency fund and so the ~5% or so in cash can just be part of that.)
I have my fixed income portion of my AA almost entirely in a separate account, and I use the SIP with the most aggressive allocation so that it is primarily equities.To do that you have to answer the risk questionnaire differently for SIP to allow that allocation, my Schwab advisor helped with that. One thing I like in SIP is that they use both cap weighted and fundamental ETF funds to retain some value approach. Yes there is the "cash drag", it is 6% of my SIP portfolio, and it does earn a low sweep money market interest, but I regard it as noninvested emergency cash, and adjust the rest of my emergency funds accordingly. True, as emergency funds, if not in SIP they could earn a higher return, even in a CD. Target date funds would incorporate a ratio of fixed income to equities, and the ratio would depend on a target date and would change over time, etc, I get it.I'm going to learn more about the Schwab Target Date funds, but I am sticking with SIP for now.

Of my equity portfolio,2/3 is primarily in VTI, 1/3 in SIP.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Fri Jun 08, 2018 1:04 am

retiredjg wrote:
Wed Jun 06, 2018 6:09 am
lhwerdyt*1791c wrote:
Tue Jun 05, 2018 10:21 pm


1. Re: Schwab Total Bond Index

Per the much appreciated above suggestions re: 10% into the Schwab Total Bond Index (SWLGX, right?)...I couldn't find it listed at S.

Schwab's related "FAQs" on this explains that it liquidated SWLGX in 2017 and suggested two replacement options:
- Schwab US Aggregate Bond Index Fund (SWAGX), and
- Schwab Bond Intermediate Index Fund (SWSBX).
SWLGX is not the right ticker, but they used to have a "Total Bond" fund that (like you) people thought was a total bond index fund. But it was not and it performed poorly during the last market crash (it took a pretty good dip). They replaced it with a true index fund which is the one named "US Aggregate Bond Index Fund" (SWAGX). This is the fund I would suggest if your friend decides not to use the target fund approach.

Great! Thx.
2. Re: Schwab Total Stock Index
What I found for this is SWTSX.

Questions 2 Is this the same fund you were referring to, re: 40% allocation?
Yes.

Question 3 If so, would Schwab U.S. Broad Market ETF be a reasonable alternative if she prefers an ETF?
Yes.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Fri Jun 08, 2018 1:13 am

retiredjg wrote:
Wed Jun 06, 2018 6:09 am
lhwerdyt*1791c wrote:
Tue Jun 05, 2018 10:21 pm


1. Re: Schwab Total Bond Index

Per the much appreciated above suggestions re: 10% into the Schwab Total Bond Index (SWLGX, right?)...I couldn't find it listed at S.

Schwab's related "FAQs" on this explains that it liquidated SWLGX in 2017 and suggested two replacement options:
- Schwab US Aggregate Bond Index Fund (SWAGX), and
- Schwab Bond Intermediate Index Fund (SWSBX).
SWLGX is not the right ticker, but they used to have a "Total Bond" fund that (like you) people thought was a total bond index fund. But it was not and it performed poorly during the last market crash (it took a pretty good dip). They replaced it with a true index fund which is the one named "US Aggregate Bond Index Fund" (SWAGX). This is the fund I would suggest if your friend decides not to use the target fund approach.

Great, thx.
2. Re: Schwab Total Stock Index
What I found for this is SWTSX.

Questions 2 Is this the same fund you were referring to, re: 40% allocation?
Yes.

Question 3 If so, would Schwab U.S. Broad Market ETF be a reasonable alternative if she prefers an ETF?
Yes.
Thx, again.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Fri Jun 08, 2018 1:18 am

4nwestsaylng wrote:
Thu Jun 07, 2018 12:34 am
JamesSFO wrote:
Sun Jun 03, 2018 9:06 am
I recently decided to give the Intelligent Portfolios a try (I'm 99% invested 3 fund) for two reasons (1) try out Schwab's customer service (so far middling to disappointing) and (2) because I was curious about the intelligent portfolio product.

I picked the most aggressive allocation and my weighted expense ratio 0.19% (vs 0.07% for rest of my portfolio) so a bit higher.

Having only been trying the product for <1 month it is hard to say much more about it. I think if I were going to do a roboadvisor (which I am :D) then picking Schwab for 0 additional direct fees (yes the cash drag) would be my choice.

(I don't find the cash drag that interesting because I usually have an emergency fund and so the ~5% or so in cash can just be part of that.)
I have my fixed income portion of my AA almost entirely in a separate account, and I use the SIP with the most aggressive allocation so that it is primarily equities.To do that you have to answer the risk questionnaire differently for SIP to allow that allocation, my Schwab advisor helped with that. One thing I like in SIP is that they use both cap weighted and fundamental ETF funds to retain some value approach. Yes there is the "cash drag", it is 6% of my SIP portfolio, and it does earn a low sweep money market interest, but I regard it as noninvested emergency cash, and adjust the rest of my emergency funds accordingly. True, as emergency funds, if not in SIP they could earn a higher return, even in a CD. Target date funds would incorporate a ratio of fixed income to equities, and the ratio would depend on a target date and would change over time, etc, I get it.I'm going to learn more about the Schwab Target Date funds, but I am sticking with SIP for now.

Of my equity portfolio,2/3 is primarily in VTI, 1/3 in SIP.
Thanks. Your perspective is helpful.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Fri Jun 08, 2018 2:02 am

Nate79 wrote:
Wed Jun 06, 2018 6:41 pm
For those that continue to erroneously mention that the SIP has a "cash drag" you should actually research the details of the actual fixed income allocation that SIP uses. There is no cash drag.

I did a quick evaluation of the yield of the example portfolio that Schwab has on this page:
https://intelligent.schwab.com/
It is a 30% fixed income allocation.
9% cash, 2% int developed bonds, 7% emerging bonds, 8% high yield bonds, 1% corporate bonds, 3% securitized bonds.

The funds they use are here:
https://intelligent.schwab.com/public/i ... asses.html

Based on this I looked at 2 options, one the SIP 30% fixed income allocation listed above and two, 30% to Vanguard total bond market.

The weighted 30 day SEC yield for the SIP is 3.7% and and TBM is 3%. --> So, SIP has a higher yielding fixed income asset allocation.

Point is that SIP uses modern portfolio theory to break up their portfolio by each different asset class and specifically for fixed income they have the cash (earning 0.5%) to offset the higher risk and higher yielding high yield and emerging market bonds.
Good info, thank you. The cash is also FDIC insured, per Schwa's website.
But as to a comparison of yields, above, doesn't a comparison of ER costs also need to be considered?
Also, what is a "cash drag" in your opinion?

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Fri Jun 08, 2018 2:14 am

billthecat wrote:
Wed Jun 06, 2018 11:22 am
lhwerdyt*1791c wrote:
Tue Jun 05, 2018 9:25 pm
billthecat wrote:
Tue Jun 05, 2018 8:58 pm
lhwerdyt*1791c wrote:
Mon Jun 04, 2018 1:35 am
billthecat wrote:
Sun Jun 03, 2018 11:43 am


Well, you have two choices: you can unwrap the funds, taking them out of your SIP account and moving them to a regular account, or liquidate the funds within SIP and transfer the proceeds to a regular account.

The first option means that when you sell, you may have to pay transaction costs, depending on the fund.

The second option takes more time because the proceeds are trapped in the SIP account until the transactions settle.

I went for option 2, without realizing how much longer it would take. I submitted the form to close the account Wednesday 11 a.m. ET, which was then "received" Thursday, and the account is scheduled to liquidate Monday, and settle Wednesday.
I would have chosen option 2, too. I can't see keeping just moving the SIP funds to a regular account if SIP isn't working for the investor in the first place (in a SIP account). But, again, my learning curve is steep. :confused

I'm assuming you didn't have to pay any transactions costs in option 2??
No, there are no transaction costs when using SIP.

I thought of a third option, which I should have done. I could have simply transferred the cash out of the SIP account, let it rebalance, transfer more, let it rebalance, transfer more, etc., etc. That method would have let me ease into my self-directed approach and smooth out any day to day market fluctuations during the transition. Oh well.
But if a SIP client transfers the cash out of the SIP account, doesn't the rebalance process automatically move funds out of the non-cash fund mix and store the original allocation of cash holding? Or is that what you are saying; keep transferring until all is depleted?

Each time you transfer the cash out it rebalances, selling some of everything to create cash. So by continuously siphoning off the cash, you can deplete the account over time. Many more steps but smooths the transition.
Helpful, thx.

Nate79
Posts: 3043
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by Nate79 » Fri Jun 08, 2018 9:43 am

lhwerdyt*1791c wrote:
Fri Jun 08, 2018 2:02 am
Nate79 wrote:
Wed Jun 06, 2018 6:41 pm
For those that continue to erroneously mention that the SIP has a "cash drag" you should actually research the details of the actual fixed income allocation that SIP uses. There is no cash drag.

I did a quick evaluation of the yield of the example portfolio that Schwab has on this page:
https://intelligent.schwab.com/
It is a 30% fixed income allocation.
9% cash, 2% int developed bonds, 7% emerging bonds, 8% high yield bonds, 1% corporate bonds, 3% securitized bonds.

The funds they use are here:
https://intelligent.schwab.com/public/i ... asses.html

Based on this I looked at 2 options, one the SIP 30% fixed income allocation listed above and two, 30% to Vanguard total bond market.

The weighted 30 day SEC yield for the SIP is 3.7% and and TBM is 3%. --> So, SIP has a higher yielding fixed income asset allocation.

Point is that SIP uses modern portfolio theory to break up their portfolio by each different asset class and specifically for fixed income they have the cash (earning 0.5%) to offset the higher risk and higher yielding high yield and emerging market bonds.
Good info, thank you. The cash is also FDIC insured, per Schwa's website.
But as to a comparison of yields, above, doesn't a comparison of ER costs also need to be considered?
Also, what is a "cash drag" in your opinion?
Yes, cash is FDIC insured. For fixed income the yields are always after ER. Note that my calculation above used the asset allocation on that specific page but the actual asset allocation and funds will be different. For example if it is a taxable account they may use a muni fund, etc.

The fixed income funds need to be look at in entirety. The high yield is being offset by lower yielding cash (though the yield of cash is rising now). Also, and what I don't know is if Schwab also increases equity exposure by adding the cash. Past analysis has shown that Schwab uses a value tilt as well which may give some extra return.

To me cash drag would be if Schwab was adding cash in the account as a substitute for another bond fund and the overall yield was less than what you would do in your own account outside SIP (for example using TBM as is recommended in the 3 fund portfolio). As I showed SIP has a higher yield than TBM and thus all the talk about "cash drag" is incorrect from a total fixed income perspective. In addition, if SIP didn't have the cash the portfolio risk would be increased.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Sun Jun 17, 2018 2:39 am

Nate79 wrote:
Fri Jun 08, 2018 9:43 am
lhwerdyt*1791c wrote:
Fri Jun 08, 2018 2:02 am
Nate79 wrote:
Wed Jun 06, 2018 6:41 pm
For those that continue to erroneously mention that the SIP has a "cash drag" you should actually research the details of the actual fixed income allocation that SIP uses. There is no cash drag.

I did a quick evaluation of the yield of the example portfolio that Schwab has on this page:
https://intelligent.schwab.com/
It is a 30% fixed income allocation.
9% cash, 2% int developed bonds, 7% emerging bonds, 8% high yield bonds, 1% corporate bonds, 3% securitized bonds.

The funds they use are here:
https://intelligent.schwab.com/public/i ... asses.html

Based on this I looked at 2 options, one the SIP 30% fixed income allocation listed above and two, 30% to Vanguard total bond market.

The weighted 30 day SEC yield for the SIP is 3.7% and and TBM is 3%. --> So, SIP has a higher yielding fixed income asset allocation.

Point is that SIP uses modern portfolio theory to break up their portfolio by each different asset class and specifically for fixed income they have the cash (earning 0.5%) to offset the higher risk and higher yielding high yield and emerging market bonds.
Good info, thank you. The cash is also FDIC insured, per Schwa's website.
But as to a comparison of yields, above, doesn't a comparison of ER costs also need to be considered?
Also, what is a "cash drag" in your opinion?
Yes, cash is FDIC insured. For fixed income the yields are always after ER. Note that my calculation above used the asset allocation on that specific page but the actual asset allocation and funds will be different. For example if it is a taxable account they may use a muni fund, etc.

The fixed income funds need to be look at in entirety. The high yield is being offset by lower yielding cash (though the yield of cash is rising now). Also, and what I don't know is if Schwab also increases equity exposure by adding the cash. Past analysis has shown that Schwab uses a value tilt as well which may give some extra return.

To me cash drag would be if Schwab was adding cash in the account as a substitute for another bond fund and the overall yield was less than what you would do in your own account outside SIP (for example using TBM as is recommended in the 3 fund portfolio). As I showed SIP has a higher yield than TBM and thus all the talk about "cash drag" is incorrect from a total fixed income perspective. In addition, if SIP didn't have the cash the portfolio risk would be increased.
Thanks for addressing so well.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Mon Jun 25, 2018 11:40 pm

rixer wrote:
Mon Jun 04, 2018 2:47 pm
I'm with Schwab and use Vanguard Lifestrategy in all accounts. Since I'm retired and don't contribute anymore, there was only a one time fee for purchasing and now we only sell as needed with NO fee at all. Works great for us so far.
Hello, was there any significant reason why you chose V Lifestrategy over V Target Retirement Fund? Thx.

rixer
Posts: 602
Joined: Tue Sep 11, 2012 4:18 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by rixer » Tue Jun 26, 2018 7:58 am

lhwerdyt*1791c wrote:
Mon Jun 25, 2018 11:40 pm
rixer wrote:
Mon Jun 04, 2018 2:47 pm
I'm with Schwab and use Vanguard Lifestrategy in all accounts. Since I'm retired and don't contribute anymore, there was only a one time fee for purchasing and now we only sell as needed with NO fee at all. Works great for us so far.
Hello, was there any significant reason why you chose V Lifestrategy over V Target Retirement Fund? Thx.
Yes, I chose LS because I'm retired and plan on staying at this allocation. The Target Date goes down to 30% equity and that's a little lower than we want to be.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Sun Jul 01, 2018 11:25 pm

rixer wrote:
Tue Jun 26, 2018 7:58 am
lhwerdyt*1791c wrote:
Mon Jun 25, 2018 11:40 pm
rixer wrote:
Mon Jun 04, 2018 2:47 pm
I'm with Schwab and use Vanguard Lifestrategy in all accounts. Since I'm retired and don't contribute anymore, there was only a one time fee for purchasing and now we only sell as needed with NO fee at all. Works great for us so far.
Hello, was there any significant reason why you chose V Lifestrategy over V Target Retirement Fund? Thx.
Yes, I chose LS because I'm retired and plan on staying at this allocation. The Target Date goes down to 30% equity and that's a little lower than we want to be.
Thank you!

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Mon Jul 02, 2018 12:44 am

lhwerdyt*1791c wrote:
Fri Jun 08, 2018 1:04 am
retiredjg wrote:
Wed Jun 06, 2018 6:09 am
lhwerdyt*1791c wrote:
Tue Jun 05, 2018 10:21 pm


1. Re: Schwab Total Bond Index

Per the much appreciated above suggestions re: 10% into the Schwab Total Bond Index (SWLGX, right?)...I couldn't find it listed at S.

Schwab's related "FAQs" on this explains that it liquidated SWLGX in 2017 and suggested two replacement options:
- Schwab US Aggregate Bond Index Fund (SWAGX), and
- Schwab Bond Intermediate Index Fund (SWSBX).
SWLGX is not the right ticker, but they used to have a "Total Bond" fund that (like you) people thought was a total bond index fund. But it was not and it performed poorly during the last market crash (it took a pretty good dip). They replaced it with a true index fund which is the one named "US Aggregate Bond Index Fund" (SWAGX). This is the fund I would suggest if your friend decides not to use the target fund approach.

Great! Thx.
2. Re: Schwab Total Stock Index
What I found for this is SWTSX.

Questions 2 Is this the same fund you were referring to, re: 40% allocation?
Yes.

Question 3 If so, would Schwab U.S. Broad Market ETF be a reasonable alternative if she prefers an ETF?
Yes.
She currently has 100% of her SEP IRA now in Schwab's Target 2020 fund (SWYLY).

Regarding her 401K funds, she is ready to do this:
Schwab US Broad Market ETF (SCHB) = 40%, and
Schwab US Aggregate Bond ETF (SCHZ) = 10%
Prudential (Pru) Stable Value (SV) Fund (still in her 401k) = 50%

However, she feels this leaves her with a target fund plus a three-fund portfolio complicated by leaving the SV $ at Prud.

Questions:

1. She is ok with having a TD plus a three-fund portfolio but wants to know, is there a simpler way to go about it assuming she still keeps SV at Pru?

2. Either way, re: the three-fund portfolio option, above, could it be said that the US Broad Market fund may include international exposure because some of the U.S. companies may also be international? (Just asking bc "three-fund" portfolios often seem to consist of international equities via a US Equities/International Equities/Bonds combo of funds.)

Note: She realizes that some portfolios do not include any purely international equities which may be design.

3. Any comments on the following...?

...Based on her reading of the Bogle Wiki info here, and the blog postings, she now has a Vanguard appreciation re: corporate structure. At some point, she may ultimately choose to change any Schwab TD funds to a Vanguard TD fund, such as 2015 or 2020 -- or a Life Strategy (LS) at an 40(s)/60(b). Either would be bought through Schwab at a $76 one-time buy fee.

Note: She knows that Vanguard's TD funds glide to a permanent 70/30 seven years after the TD year. And she knows its LF allows the investor to set the AA.

Thanks in advance!

retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Mon Jul 02, 2018 7:17 am

lhwerdyt*1791c wrote:
Mon Jul 02, 2018 12:44 am
1. She is ok with having a TD plus a three-fund portfolio but wants to know, is there a simpler way to go about it assuming she still keeps SV at Pru?
She could keep it all at Prudential. That would be simpler. If she wants to move her money and if she wants to keep the SV, that sounds like a reasonable idea.

If she is willing to give up the SV fund, putting all this money into the target date fund would be simpler too.

2. Either way, re: the three-fund portfolio option, above, could it be said that the US Broad Market fund may include international exposure because some of the U.S. companies may also be international? (Just asking bc "three-fund" portfolios often seem to consist of international equities via a US Equities/International Equities/Bonds combo of funds.)
This part of the portfolio would not really be "the three fund" portfolio which is specifically a total stock index, a total international index, and a bond fund (total bond index when available). But it would be a fine portfolio if that is what she wants.

3. Any comments on the following...?

...Based on her reading of the Bogle Wiki info here, and the blog postings, she now has a Vanguard appreciation re: corporate structure. At some point, she may ultimately choose to change any Schwab TD funds to a Vanguard TD fund, such as 2015 or 2020 -- or a Life Strategy (LS) at an 40(s)/60(b). Either would be bought through Schwab at a $76 one-time buy fee.
There is no particular need to do this, but she could if she wants. Be sure there is no fee when selling.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Mon Jul 02, 2018 11:18 pm

retiredjg wrote:
Mon Jul 02, 2018 7:17 am
lhwerdyt*1791c wrote:
Mon Jul 02, 2018 12:44 am
1. She is ok with having a TD plus a three-fund portfolio but wants to know, is there a simpler way to go about it assuming she still keeps SV at Pru?
She could keep it all at Prudential. That would be simpler. If she wants to move her money and if she wants to keep the SV, that sounds like a reasonable idea.

If she is willing to give up the SV fund, putting all this money into the target date fund would be simpler too.

2. Either way, re: the three-fund portfolio option, above, could it be said that the US Broad Market fund may include international exposure because some of the U.S. companies may also be international? (Just asking bc "three-fund" portfolios often seem to consist of international equities via a US Equities/International Equities/Bonds combo of funds.)
This part of the portfolio would not really be "the three fund" portfolio which is specifically a total stock index, a total international index, and a bond fund (total bond index when available). But it would be a fine portfolio if that is what she wants.

3. Any comments on the following...?

...Based on her reading of the Bogle Wiki info here, and the blog postings, she now has a Vanguard appreciation re: corporate structure. At some point, she may ultimately choose to change any Schwab TD funds to a Vanguard TD fund, such as 2015 or 2020 -- or a Life Strategy (LS) at an 40(s)/60(b). Either would be bought through Schwab at a $76 one-time buy fee.
There is no particular need to do this, but she could if she wants. Be sure there is no fee when selling.
#1: Ok. Note: She already transferred half of the Pru to Schwab so can't keep it al; at Pru. She only wanted to keep SV at Pru, if that.
#2: Ok. We will look to see if Schwab has a three-fund: Total Stock index, total international, index, and a bond (total if available) at some point if she wants to consider it.
#3: Thanks again.

retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Tue Jul 03, 2018 6:52 am

lhwerdyt*1791c wrote:
Mon Jul 02, 2018 11:18 pm

#2: Ok. We will look to see if Schwab has a three-fund: Total Stock index, total international, index, and a bond (total if available) at some point if she wants to consider it.
Schwab's Target Date Index funds would be essentially the same as a "3 fund portfolio". They use slightly different building blocks to get there, but the result is very close to the same thing.

Other than keeping the stable value fund at Prudential, there is no compelling reason for her to do anything other than use the target fund in all of her accounts.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Fri Jul 13, 2018 8:06 pm

retiredjg wrote:
Tue Jul 03, 2018 6:52 am
lhwerdyt*1791c wrote:
Mon Jul 02, 2018 11:18 pm

#2: Ok. We will look to see if Schwab has a three-fund: Total Stock index, total international, index, and a bond (total if available) at some point if she wants to consider it.
Schwab's Target Date Index funds would be essentially the same as a "3 fund portfolio". They use slightly different building blocks to get there, but the result is very close to the same thing.

Other than keeping the stable value fund at Prudential, there is no compelling reason for her to do anything other than use the target fund in all of her accounts.
Ok. Thanks, retiredjg and all for your help with this.

Comment: One thing we've noticed about Schwab's TD funds compared to Vanguard's is that Schwab TD funds tend to have more cash allocated. And Schwab tends to have higher turnover rates. But I guess not good enough reason to buy Vanguard TD or LifeStrategy as a Schwab customer at $76-a-buy. She is staying with Schwab for the in-person convenience in case she needs it.

retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Sat Jul 14, 2018 8:21 am

Paying $76 one or two times will not ruin her portfolio if she prefers the Vanguard product. However, if there is also a fee for selling it would be a bad idea because she may be selling several times a year.

The important thing is to make a decision and get the money where it needs to be. Any of these choices is a good choice. She just needs to pick one.

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Mon Jul 16, 2018 1:26 pm

retiredjg wrote:
Sat Jul 14, 2018 8:21 am
Paying $76 one or two times will not ruin her portfolio if she prefers the Vanguard product. However, if there is also a fee for selling it would be a bad idea because she may be selling several times a year.

The important thing is to make a decision and get the money where it needs to be. Any of these choices is a good choice. She just needs to pick one.
We understand, thank you. My friend is definitely not going to be selling or trading; more of a "hold" with the possibility of a change down the line. She has already bought the Schwab target fund as suggested.

Thanks so much for your dedication to helping her on this. She is grateful, as I am, too.

retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Mon Jul 16, 2018 1:56 pm

Happy to help. Hope things work out well for her (and you too!). :happy

lhwerdyt*1791c
Posts: 155
Joined: Sat Nov 25, 2017 12:04 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by lhwerdyt*1791c » Mon Jul 16, 2018 2:40 pm

retiredjg wrote:
Mon Jul 16, 2018 1:56 pm
Happy to help. Hope things work out well for her (and you too!). :happy
Very kind of you.

Wricha
Posts: 305
Joined: Sun Mar 25, 2012 10:33 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by Wricha » Mon Jul 16, 2018 7:27 pm

lhwerdyt*1791c wrote:
Wed Mar 07, 2018 3:16 pm
Hello,

The Forum has already suggested a Schwab Target Fund (or a three fund) for in-retirement investing.

I met with Schwab and they recommended a Schwab Intelligent Portfolio (SIP) approach to consider as a lost-cost options: 0% in advisory related fees.

I reviewed at least some of the SIP posts on the forum and still have more to read. Some of such posts, and related links, identify a "cash drag" concern. An external link (I will have to find it again and include it here) identifies the same concern, and further offers an example how it could get costly.

Is this enough information for the Forum to further compare the two approaches?

Thx so much,

LH
Here's your Schwab Intelligent Portfolios® account update as of 07/13/2018.

Your Investment Performance

Last Week
0.27%
Last Month
-0.39%
Year to Date
0.76%

I would say no to SIP

Nate79
Posts: 3043
Joined: Thu Aug 11, 2016 6:24 pm
Location: Portland, OR

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by Nate79 » Mon Jul 16, 2018 8:19 pm

Wricha wrote:
Mon Jul 16, 2018 7:27 pm
lhwerdyt*1791c wrote:
Wed Mar 07, 2018 3:16 pm
Hello,

The Forum has already suggested a Schwab Target Fund (or a three fund) for in-retirement investing.

I met with Schwab and they recommended a Schwab Intelligent Portfolio (SIP) approach to consider as a lost-cost options: 0% in advisory related fees.

I reviewed at least some of the SIP posts on the forum and still have more to read. Some of such posts, and related links, identify a "cash drag" concern. An external link (I will have to find it again and include it here) identifies the same concern, and further offers an example how it could get costly.

Is this enough information for the Forum to further compare the two approaches?

Thx so much,

LH
Here's your Schwab Intelligent Portfolios® account update as of 07/13/2018.

Your Investment Performance

Last Week
0.27%
Last Month
-0.39%
Year to Date
0.76%

I would say no to SIP
I hope you understand that no intelligent decision can come from what you posted.

tj
Posts: 2061
Joined: Thu Dec 24, 2009 12:10 am

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by tj » Fri Aug 17, 2018 6:17 pm

Nate79 wrote:
Fri Jun 08, 2018 9:43 am
lhwerdyt*1791c wrote:
Fri Jun 08, 2018 2:02 am
Nate79 wrote:
Wed Jun 06, 2018 6:41 pm
For those that continue to erroneously mention that the SIP has a "cash drag" you should actually research the details of the actual fixed income allocation that SIP uses. There is no cash drag.

I did a quick evaluation of the yield of the example portfolio that Schwab has on this page:
https://intelligent.schwab.com/
It is a 30% fixed income allocation.
9% cash, 2% int developed bonds, 7% emerging bonds, 8% high yield bonds, 1% corporate bonds, 3% securitized bonds.

The funds they use are here:
https://intelligent.schwab.com/public/i ... asses.html

Based on this I looked at 2 options, one the SIP 30% fixed income allocation listed above and two, 30% to Vanguard total bond market.

The weighted 30 day SEC yield for the SIP is 3.7% and and TBM is 3%. --> So, SIP has a higher yielding fixed income asset allocation.

Point is that SIP uses modern portfolio theory to break up their portfolio by each different asset class and specifically for fixed income they have the cash (earning 0.5%) to offset the higher risk and higher yielding high yield and emerging market bonds.
Good info, thank you. The cash is also FDIC insured, per Schwa's website.
But as to a comparison of yields, above, doesn't a comparison of ER costs also need to be considered?
Also, what is a "cash drag" in your opinion?
Yes, cash is FDIC insured. For fixed income the yields are always after ER. Note that my calculation above used the asset allocation on that specific page but the actual asset allocation and funds will be different. For example if it is a taxable account they may use a muni fund, etc.

The fixed income funds need to be look at in entirety. The high yield is being offset by lower yielding cash (though the yield of cash is rising now). Also, and what I don't know is if Schwab also increases equity exposure by adding the cash. Past analysis has shown that Schwab uses a value tilt as well which may give some extra return.

To me cash drag would be if Schwab was adding cash in the account as a substitute for another bond fund and the overall yield was less than what you would do in your own account outside SIP (for example using TBM as is recommended in the 3 fund portfolio). As I showed SIP has a higher yield than TBM and thus all the talk about "cash drag" is incorrect from a total fixed income perspective. In addition, if SIP didn't have the cash the portfolio risk would be increased.
It's still not an accident that they don't utilize the higher yielding money market fund for the cash portion in SIP that they use in their Target Date Funds...if they did that, the yield would be even better.

JustWantToGetItRight
Posts: 2
Joined: Sat Aug 18, 2018 2:18 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by JustWantToGetItRight » Sat Aug 18, 2018 2:56 pm

Tried Everything: I've tried everything and I am unsure of what to do....

Merrill Lynch Didn't work: I was with Merrill Lynch, managed roth, robbo taxable, and self directed in a vanguard target 2030. The best performer was the 2030, but...

Schwab Alliance With Local Money Manager Failed: I moved to a money manager firm who uses Schwab as a custodian. After a year, I paid 4K in fees, my account was flat, and the guy had an attitude and ego when I asked him why he was making certain decisions. NOT! That relationship just ended.

Schwab Intelligent Advisor: Now, Schwab is suggesting I try the Intelligent Advisor program (24 hour access to to pro advice, tax harvesting, rebalancing, a well balanced portfolio based on your goals, etc.).

OR, I can just buy a few target dated funds and call it day (even if that means moving to Vanguard).

Any help?

retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Sat Aug 18, 2018 3:59 pm

JustWantToGetItRight wrote:
Sat Aug 18, 2018 2:56 pm
OR, I can just buy a few target dated funds and call it day (even if that means moving to Vanguard).

Any help?
To a certain extent, you can...although there might not be a low cost target fund in your work plan and target funds are usually not the best choice for a taxable account. However, we know how to manage that too.

You need to start your learning here... https://www.bogleheads.org/wiki/Getting_started

...And when you are ready to talk about your portfolio, post your information in the format shown in the link at the bottom of this message. The closer you follow the format, the better help you will get.

This is not rocket science. Most people can learn enough to do it on their own. People here can and will help.

Just take a deep breath and get started on the link above.

JustWantToGetItRight
Posts: 2
Joined: Sat Aug 18, 2018 2:18 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by JustWantToGetItRight » Sat Aug 18, 2018 7:58 pm

Thanks. Watched ll the videos. But unsure what you mean about posting a link to my contact.

retiredjg
Posts: 33242
Joined: Thu Jan 10, 2008 12:56 pm

Re: Schwab Intelligent Portfolio vs. Schwab Target Fund

Post by retiredjg » Sat Aug 18, 2018 8:04 pm

What I meant is to post your financial information in the format shown in the link below called "Asking Portfolio Questions".

It will take some work on your part to gather and post the requested information. You will learn a lot by doing it. We can answer most portfolio questions with the information requested in that link.

Post Reply