Schwab 3-4 Fund Portfolio

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kobebr
Posts: 19
Joined: Thu Oct 20, 2016 9:51 pm

Schwab 3-4 Fund Portfolio

Post by kobebr » Sat Mar 04, 2017 7:04 pm

Hello All,

As others have recently mentioned, Schwab has lowered the ERs on their index funds and I am now considering them, instead of Schwab's ETFs.

I am sure this has been answered previously, but is the following the traditional Schwab 3-fund portfolio for index funds:

- Schwab Total Stock Market Index (SWTSX)
- Schwab International Index (SWISX)
- Schwab Total Bond Market (SWLBX)

2. Are there better schwab index funds that I should be considering?

3. Is there a schwab index fund which people recommend for emerging markets, similar to SCHE (Schwab International Equity ETF)?

4. For a 3-4 fund Schwab portfolio using ETFs, is the following considered a strong option:

- SCHB- Schwab U S Broad Market ETF:
- SCHZ- Schwab US Ag Bd
- 4:1 ratio of SCHF to SCHE (Schwab International Equity ETF to Schwab Emerging Markets Equity ETF)

Thanks for your help!

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curiouskitty
Posts: 175
Joined: Sun Oct 18, 2009 1:40 am

Re: Schwab 3-4 Fund Portfolio

Post by curiouskitty » Sat Mar 04, 2017 7:29 pm

Yes I use the stock mutual funds and ETFs that you mention and find them to be well run and low cost. I don't have bonds with Schwab so can't comment specifically there but I have seen both those funds mentioned on this forum in the past.

For emerging, SCHE is by far the best option so I would just use an ETF for that part even if you decide to use index funds for US and international.

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patrick013
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Joined: Mon Jul 13, 2015 7:49 pm

Re: Schwab 3-4 Fund Portfolio

Post by patrick013 » Sat Mar 04, 2017 7:30 pm

Market Cap Index ETFs - Schwab

Whatever VG would be use the Schwab equivalent. Mutual funds are
in the Mutual Fund tab.
age in bonds, buy-and-hold, 10 year business cycle

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in_reality
Posts: 4274
Joined: Fri Jul 12, 2013 6:13 am

Re: Schwab 3-4 Fund Portfolio

Post by in_reality » Sat Mar 04, 2017 7:33 pm

kobebr wrote:Hello All,

As others have recently mentioned, Schwab has lowered the ERs on their index funds and I am now considering them, instead of Schwab's ETFs.

I am sure this has been answered previously, but is the following the traditional Schwab 3-fund portfolio for index funds:

- Schwab Total Stock Market Index (SWTSX)
- Schwab International Index (SWISX)
- Schwab Total Bond Market (SWLBX)


Two points. Schwab mutual funds (like other non-Vanguard funds) will have yearly capital gains distributions. They are index funds so it won't be as bad as an active fund, but it will most likely be more than the ETF which will likely be zero (some bonds ETFs occasionally have a capital gain - I don't think a Schwab ETF ever has).

I would use their new SWAGX 0.04% bond fund instead of SWLBX. SWLBX isn't a true index fund and does track the returns but doesn't necessarily hold what's in the index.

3. Is there a schwab index fund which people recommend for emerging markets, similar to SCHE (Schwab International Equity ETF)?

4. For a 3-4 fund Schwab portfolio using ETFs, is the following considered a strong option:

- SCHB- Schwab U S Broad Market ETF:
- SCHZ- Schwab US Ag Bd
- 4:1 ratio of SCHF to SCHE (Schwab International Equity ETF to Schwab Emerging Markets Equity ETF)

Thanks for your help!


That's pretty good. The link below is a simple calculator I created to show what the ETFs would be by market capitalization. It mostly works but draws data from Morningingstar who sometimes changes their format....

http://schwab.com/public/schwab/inv ... Dundefined

Another alternative is the Schwab Target Index Funds. It's a mutual fund that uses the underlying ETFs. https://csimfunds.com/secure/file/P-9430864
Note: Schwab has another Target Retirement fund too. The Target Index Funds have a 0.13%ER (or lower through an institution).
Last edited by in_reality on Wed Mar 22, 2017 5:44 pm, edited 1 time in total.

TX_Man
Posts: 96
Joined: Mon Jan 19, 2015 5:53 pm

Re: Schwab 3-4 Fund Portfolio

Post by TX_Man » Mon Mar 13, 2017 5:02 pm

kobebr wrote:Hello All,

As others have recently mentioned, Schwab has lowered the ERs on their index funds and I am now considering them, instead of Schwab's ETFs.

I am sure this has been answered previously, but is the following the traditional Schwab 3-fund portfolio for index funds:

- Schwab Total Stock Market Index (SWTSX)
- Schwab International Index (SWISX)
- Schwab Total Bond Market (SWLBX)

2. Are there better schwab index funds that I should be considering?

3. Is there a schwab index fund which people recommend for emerging markets, similar to SCHE (Schwab International Equity ETF)?

4. For a 3-4 fund Schwab portfolio using ETFs, is the following considered a strong option:

- SCHB- Schwab U S Broad Market ETF:
- SCHZ- Schwab US Ag Bd
- 4:1 ratio of SCHF to SCHE (Schwab International Equity ETF to Schwab Emerging Markets Equity ETF)

Thanks for your help!


I would consider using the Schwab U.S. Aggregate Bond Index Fund (SWAGX) in lieu of the Schwab Total Bond Market (SWLBX). SWAGX has a lower expense ratio (0.04% vs 0.29%).

kobebr
Posts: 19
Joined: Thu Oct 20, 2016 9:51 pm

Re: Schwab 3-4 Fund Portfolio

Post by kobebr » Mon Mar 13, 2017 11:28 pm

Great! Thanks for the input!

cmoneymillz
Posts: 43
Joined: Thu Mar 02, 2017 8:07 am

Re: Schwab 3-4 Fund Portfolio

Post by cmoneymillz » Tue Mar 14, 2017 6:53 am

Is the account taxable?
Just did the same thing myself. Being overly aggressive at age 27, and being a taxable account, I chose to go w ETFs:
80% SCHB
20% 4:1 SCHF : SCHE

Got some bond exposure through 401k 2060 fund
Ps ETF allows for tax loss harvesting, and like mentioned above, less cap gains (better if taxable).

If tax advantage account, cannot go wrong w the mutual funds they offer.

tsewell10
Posts: 19
Joined: Wed Oct 12, 2016 11:22 am

Re: Schwab 3-4 Fund Portfolio

Post by tsewell10 » Wed Mar 22, 2017 5:14 pm

It sounds like I am in nearly the same process as you. My wife has a 401K with Schwab and I am wanting to move away from Guided Choice and handle it myself.

I looked at ETF's first and came up with a portfolio that would look like this:
SCHB - Schwab U S Broad Market ETF (59.5%)
SCHF - Schwab International Equity ETF (18.1%)
SCHC - Schwab Intl Small Cap Equity ETF (2.6%)
SCHE - Schwab Emerging Markets Equity ETF (4.8%)
SCHZ - Schwab US Ag Bd (15%)

Being in a 401K and with the new lower fees for mutual funds I would prefer to use mutual funds as well. Would these be reasonable replacements for the listed ETF's?
SWTSX - Schwab Total Stock Market Index Fund®
SWISX - Schwab International Index Fund®
SFILX - Schwab Fundamental International Small Company Index Fund
SFENX - Schwab Fundamental Emerging Markets Large Company Index Fund
SWAGX - Schwab U.S. Aggregate Bond Index Fund

Do these look appropriate and if I am looking for an 85/15 allocation could I just copy the percentages I came up with for the ETF's?

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in_reality
Posts: 4274
Joined: Fri Jul 12, 2013 6:13 am

Re: Schwab 3-4 Fund Portfolio

Post by in_reality » Wed Mar 22, 2017 5:47 pm

tsewell10 wrote:It sounds like I am in nearly the same process as you. My wife has a 401K with Schwab and I am wanting to move away from Guided Choice and handle it myself.

I looked at ETF's first and came up with a portfolio that would look like this:
SCHB - Schwab U S Broad Market ETF (59.5%)
SCHF - Schwab International Equity ETF (18.1%)
SCHC - Schwab Intl Small Cap Equity ETF (2.6%)
SCHE - Schwab Emerging Markets Equity ETF (4.8%)
SCHZ - Schwab US Ag Bd (15%)

Being in a 401K and with the new lower fees for mutual funds I would prefer to use mutual funds as well. Would these be reasonable replacements for the listed ETF's?
SWTSX - Schwab Total Stock Market Index Fund®
SWISX - Schwab International Index Fund®
SFILX - Schwab Fundamental International Small Company Index Fund
SFENX - Schwab Fundamental Emerging Markets Large Company Index Fund
SWAGX - Schwab U.S. Aggregate Bond Index Fund

Do these look appropriate and if I am looking for an 85/15 allocation could I just copy the percentages I came up with for the ETF's?


Yes, you'd just use the same percents as for the ETFs.

Do note that SFILX and SFENX are most comparable to FNDC and FNDE given that they are a type of value fund. I prefer them myself thinking the correlation between US large growth and international value will be less. They've done well recently but do know all value funds have periods, perhaps long periods where they don't. If you use them keep using them!

investmentpanda
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Joined: Wed Oct 25, 2017 12:29 pm

Re: Schwab 3-4 Fund Portfolio

Post by investmentpanda » Mon Oct 30, 2017 10:16 am

I see that many recommended the ETF funds in a taxable account. I don't see a way to setup automatic investing without using the mutual funds. I think that reason alone might be enough to switch to Vanguard?

Curious what everyone else is doing in regards to Schwab ETF automatic investing.

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