1. Original data was based on 1,269 observations and came from a special retirement planning module for the 2004 Health and Retirement Study targeting Americans over the age of 50. Source: Lusardi, Annamaria, and Mitchell, Olivia S., "Financial Literacy and Planning: Implications for Retirement Wellbeing," May 2011, page 29. ©2011 by Annamaria Lusardi and Olivia S. Mitchell. All rights reserved.
Investing involves risks including possible loss of principal.
Diversification, automatic investing, and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.
You should read the tax-loss harvesting disclosures on the Website and in the Brochure before choosing the tax-loss harvesting feature if you decide to enroll in Schwab Intelligent Portfolios. Neither the tax-loss harvesting strategy for the Schwab Intelligent Portfolios program nor any discussion herein is intended as tax advice. Neither Charles Schwab & Co., Inc. ("Schwab") nor its affiliates, including but not limited to Charles Schwab Investment Advisory, Inc. represent that any particular tax consequences, benefits, or outcomes will be obtained.
Indexes used for Charts 2 and 3
U.S. large company stocks: S&P 500® Index; U.S. small company stocks: Russell 2000® Index; Int'l large company stocks: MSCI EAFE® Index; Int'l small company stocks: MSCI EAFE Small Cap Index; Emerging markets stocks: MSCI Emerging Market Index; REITs: S&P US REIT Index; U.S. Treasuries: Barclays US Treasury 3-7 Year Index; Investment-grade corporate bonds: Barclays US Credit Index; High-yield corporate bonds: Barclays Corporate High-Yield Index; International bonds: Barclays Global Aggregate Ex-USD Index; Emerging markets bonds: Barclays Emerging Markets USD Aggregate Index; Precious metals: S&P GSCI Precious Metals Index; Cash: Barclays US Treasury Bill 1-3 Month Index
Indexes used for Chart 4
U.S. large company stocks: S&P 500® Index; prior to 1957, the S&P 500 was simulated using a well-accepted methodology provided by Ibbotson; U.S. small company stocks: Russell 2000® Index; the CRSP 6-8 Index was used prior to 1979; International stocks: MSCI EAFE® Net of Taxes; Bonds: Barclays U.S. Aggregate Index; the Ibbotson Intermediate-Term Government Bond Index was used prior to 1976; Cash and cash investments: Citigroup 3-Month U.S. Treasury Bill Index; the Ibbotson U.S. 30-day Treasury Bill Index was used prior to 1978.
Index Definitions
Bloomberg Barclays Global Aggregate ex-USD Index is designed to be a broad-based measure of global investment-grade fixed income markets outside of the U.S.
Bloomberg Barclays U.S. Aggregate Index is a market-value-weighted index of taxable investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of one year or more.
Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below.
Barclays U.S. Credit Index measures the investment grade, USD-denominated, fixed-rate, taxable corporate and government-related bond markets. It comprises of the U.S. Corporate Index and a non-corporate component that includes foreign agencies, sovereigns, supranationals and local authorities. The U.S. Credit Index is a subset of the U.S. Government/Credit Index and U.S. Aggregate Index.
Bloomberg Barclays U.S. Treasury Bill 1-3 Month Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value. In addition, the securities must be denominated in U.S. dollars and must be fixed rate and non-convertible.
Bloomberg Barclays U.S. Treasury 3-7 Year Index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity between three and seven years.
Bloomberg Barclays Emerging Markets USD Aggregate Index includes USD-denominated debt from emerging markets in the following regions: the Americas, Europe, the Middle East, Africa and Asia.
Citigroup 3-Month U.S. Treasury Bill Index measures monthly total return equivalents of yield averages that are not marked to market. The index consists of the last three three-month Treasury bill issues.
CRSP 6-8 Index is a small-cap index created and maintained by the Center for Research in Security Prices (CRSP) at the University of Chicago's Graduate School of Business. CRSP capitalization-based indexes include common stocks listed on the NYSE, AMEX, and the NASDAQ National Market. The CRSP 6-8 Index refers to the 6th through the 8th deciles and excludes micro-caps.
Ibbotson Intermediate-Term Government Bond Index is constructed from monthly returns of non-callable bonds with maturities of not less than five years, held for the calendar year.
Ibbotson U.S. 30-day Treasury Bill Index is compiled from Wall Street Journal prices for 1977 to the present and the CRSP U.S. Government Bond File from 1926 to 1976.
MSCI EAFE® Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE Index consists of the following 21 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The index consists of the following 23 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.
MSCI EAFE Small Cap Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of small cap representation across developed markets, excluding the U.S. and Canada. Developed market countries in the MSCI-EAFE Small Cap Index include: Australia, Austria, Belgium, Denmark, Finland, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Signapore, Spain, Sweden, Switzerland and the UK.
Russell 2000® Index is composed of the 2,000 smallest companies in the Russell 3000 Index, which contains the largest 3,000 companies incorporated in the United States and represents approximately 98% of the investable U.S. equity market.
S&P U.S. REIT Index defines and measures the investable universe of publicly traded real estate investment trusts domiciled in the US.
S&P 500® Index is a market-capitalization-weighted index that consists of 500 widely traded stocks chosen for market size, liquidity, and industry group representation.
S&P GSCI Precious Metals Index provides investors with a reliable and publicly available benchmark for investment performance in the precious metals market.
The indexes are unmanaged, do not incur fees and expenses, and cannot be invested in directly.
Please read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs.
Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ are made available through Charles Schwab & Co. Inc. ("Schwab"), a dually registered investment advisor and broker dealer. Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. ("CSIA"). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation.
There is no advisory fee or commissions charged for Schwab Intelligent Portfolios. For Schwab Intelligent Portfolios Premium, there is an initial planning fee of $300 upon enrollment and a $30-per-month advisory fee charged on a quarterly basis as detailed in the Schwab Intelligent Portfolios Solutions™ disclosure brochures. Investors in Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium (collectively, "Schwab Intelligent Portfolios Solutions") do pay direct and indirect costs. These include ETF operating expenses which are the management and other fees the underlying ETFs charge all shareholders. Schwab does not charge an advisory fee for the SIP Program in part because of the revenue Schwab Bank generates from the cash allocation (an indirect cost of the Program). The portfolios include a cash allocation to FDIC‐insured Deposit Accounts at Charles Schwab Bank, SSB ("Schwab Bank"). Schwab Bank earns income on the deposits, and earns more the larger the cash allocation. The lower the interest rate Schwab Bank pays on the cash, the lower the yield. Some cash alternatives outside of Schwab Intelligent Portfolios Solutions pay a higher yield. Schwab Intelligent Portfolios Solutions invests in Schwab ETFs. A Schwab affiliate, Charles Schwab Investment Management Inc., receives management fees on those ETFs. Schwab Intelligent Portfolios Solutions also invests in third-party ETFs. Schwab receives compensation from some of those ETFs for providing shareholder services, and also from market centers where ETF trade orders are routed for execution. Fees and expenses will lower performance, and investors should consider all program requirements and costs before investing. Expenses and their impact on performance, conflicts of interest, and compensation that Schwab and its affiliates receive are detailed in the Schwab Intelligent Portfolios Solutions disclosure brochures.
The cash allocation in Schwab Intelligent Portfolios Solutions™ will be accomplished through enrollment in the Schwab Intelligent Portfolios Sweep Program (Sweep Program), a program sponsored by Charles Schwab & Co., Inc. By enrolling in Schwab Intelligent Portfolios Solutions, clients consent to having the free credit balances in their Schwab Intelligent Portfolios Solutions brokerage accounts swept to deposit accounts at Charles Schwab Bank through the Sweep Program. Charles Schwab Bank is an FDIC-insured depository institution affiliated with Charles Schwab & Co., Inc. and Charles Schwab Investment Advisory, Inc.
Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ are designed to monitor portfolios on a daily basis and will also automatically rebalance as needed to keep the portfolio consistent with the client's selected risk profile. Trading may not take place daily.
Tax-loss harvesting is available for clients with invested assets of $50,000 or more in their account. Clients must choose to activate this feature. The tax-loss harvesting feature that is available with Schwab Intelligent Portfolios Solutions™ is subject to significant limitations which are described on the Schwab Intelligent Portfolios Solutions website and mobile application (collectively, the "Website") as well as in the Schwab Intelligent Portfolios Solutions™ disclosure brochures (the "Brochures"), and the IRS website at www.irs.gov. You should consider whether to activate the tax-loss harvesting feature based on your particular circ*mstances and the potential impact tax-loss harvesting may have on your tax situation. You should read the tax-loss harvesting disclosures on the Website and in the Brochures before choosing the tax-loss harvesting feature. Neither the tax-loss harvesting strategy nor any discussion herein is intended as tax advice, and neither Charles Schwab & Co., Inc. nor its affiliates, including but not limited to Charles Schwab Investment Advisory, Inc., represents that any particular tax consequences will be obtained.
Diversification, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses.
