Schwab Intelligent Portfolios [EXPOSED]: Should You Invest Here in 2020

MY EXACT Dividend Stock Portfolio -- See it in M1 Finance! ||
What exactly are Schwab Intelligent Portfolios? In an age where we have more investment platforms than EVER before, such as established platforms like Fidelity, Vanguard, TD Ameritrade, Schwab, J.P. Morgan and Merrill Lynch OR new and exciting investing platforms such as Robinhood, M1 Finance or Betterment, the Average Joe needs to understand the differences between the platforms and the value they offer them. In this video I am breaking down EVERYTHING you need to know about Schwab Intelligent Platforms and we are answering the question: Is this a good place to invest here in 2020? This is your comprehensive Schwab Intelligent Portfolios Review.

WHAT ARE SCHWAB INTELLIGENT PORTFOLIOS?
Schwab's Intelligent Portfolios is a unique platform where Schwab utilizes automated investing, known as a Robo-Advisor, to help build and manage your investing portfolio.

HOW DO SCHWAB INTELLIGENT PORTFOLIOS WORK?
Schwab's Intelligent Portfolio, PRIOR TO setting up your portfolio, sends you through a quiz where they ask you questions about how you feel about risk and how you respond to risk so that the portfolio they establish for you is in line with your risk appetite.

The reality is everybody is on a different spectrum when it comes to risk management and how we feel about risk. There are some people that take huge risks with their money and have no trouble sleeping. There are others that think they have a large risk appetite but actually DO NOT, and then there are others who KNOW that the potential risk of losing money bothers them. Knowing where you land on the risk spectrum is CRITICAL to investing success.

After going through the questionnaire, the Charles Schwab Intelligent Portfolio will then recommend a portfolio based on stocks, bonds, commodities, and cash/cash equivalents.

WHAT TYPES OF INVESTMENTS ARE INCLUDED?
Schwab's Intelligent Portfolio makes it clear on their website that they utilize Exchange Traded Funds (ETF's) in their portfolio and they have (4) key criteria that they use to filter the ETF's that they use:

Assets Under Management (AUM)
ETF liquidity
How closely the ETF tracks its underlying index
operating expense ratio (OER)

Schwab's Intelligent Portfolios claims to have filtered through over 1,800 different ETF's down to the 53 that they offer across 20 different asset classes. Schwab also claims that for every asset class they have a primary ETF and a secondary ETF and that the ETF's in each asset class track separate indexes which supports the ability to offer tax loss harvesting.

WHAT IS TAX LOSS HARVESTING?
Tax Loss Harvesting is the process by which the investing platform analyzes investment gains in your Schwab Intelligent Portfolio compared to potential losses during the year and they will intentionally SELL poorly performing investments if applicable to offset gains in other investments to mitigate tax liabilities.

FINAL THOUGHTS ON SCHWAB INTELLIGENT PORTFOLIOS
Schwab's Inteligent Portfolios is actually not a bad choice for the average investor, especially those who want to invest as much money as possible but DO NOT want to actively be choosing investments or have to worry about where the money is invested and how diversified the investments are.

[frustrateduser]

Hi Joe, I wanted to clarify a few things you said in the video. Let's look at tax loss harvesting. Here's an example - Let's say you bought $10, 000 worth of an ETF (ETF-A) at a value of $100 per share and then due to a market crash, this ETF's price falls down to $90. You could sell your holdings of ETF-A and buy $9000 worth of ETF-B, which tracks a highly correlated index (but not necessarily the same one). Because they track a similar index, the value of ETF-B has also fallen around 10%, so you are technically not losing anything, but for tax purposes, that is a short term loss of $1000. Now, assuming a 40% tax rate (federal and state combined), you save around $400 in taxes, which you can reinvest into your account at the time you file taxes. Let's then assume that in 8 months the market makes up the loss and now you have $10, 000 worth of ETF-B. If you had not performed tax-loss harvesting, you'd still have $10, 000 worth of ETF-A, but you won't have that extra $400 at tax time. I hope that made sense. An example for ETF-A and B combo would be VTI and ITOT. I am not sure why Schwab worded their description in such a confusing manner; what they should have said was that their secondary ETF tracks an index that is highly correlated to the index tracked by their primary ETF.

[Erika]

Really informative, I appreciate the comparisons with other services! Let us know when you decide to use Schwab Intelligent Portfolios!

[akin]

Thanks for the deep research. I'm a fan of Charles Schwab, but not the Intelligent Portfolio. Too much in cash holding. That turns out to compound interest lost on cash doing nothing.

[jamesearls]

Yep I’m going to do a Roth in this because I’m one of the ones who don’t understand the markets and want a hands off approach.

[MotoMatsalleh]

I’m also a Youtuber: you kept my attention for 11 mins bravo

[cluedin]

You should mention they hold 6+% in cash and lend it out, where they make $, while you get cash drag

[davidvinson]

I would like for the IRA accounts for me and my wife to be included in one Intelligent Portfolio profile/dashboard. This NEVER is discussed for these robo advisor services. My retirement goals don't exist in a vacuum.. it is a common goal between me and my wife. Do you know if Schwab's IP would accomodate this? Or would she have to have a totally separate login ID, etc?

[kjindy]

Joe, thanks for the info. Any idea how the Schwab Intelligent portfolio compares to Fidelity go?

[rubenl.]

Tax harvesting is not automatic w the intelligent portfolios. You have the option to opt in once you hit 50k. Also during a recession or bear market year, the cash holding will be your biggest winner. The dollar is still an asset.

[cesarpenailillo]

Good video Joe. I appreciate the work you put on this one. I do used Schwab services and I like them very much as their customer service is awesome!. I do not use their Intelligent Portolio service so far. So it's good to have different opinions on such feature. Wish you a great and prosperous 2021!

[deckape]

If I set up an intelligent portfolio, does it open a separate account for the AI to manage or does it take over all of my accounts with an AI? I'd prefer to test it for a year to see how it compares to my current account.

[PulverizerA]

I'm on the fence on Schwab for my Roth at the moment, because they make you keep 6% - 30% cash (they lend it out) as an asset in your IP, and they aren't doing fractional shares yet.
Their customer service is top notch though, and they're so big, you know they aren't going anywhere if the economy goes to shit.
I really like M1's features, but I hear their customer service is the shits and they're small and probably will be gobbled up by someone bigger sooner or later.
So, I have until tax day to open a Roth for 2019 and see if Schwab initiates their fractional share feature. If they don't I'll more than likely go M1 for the fractional shares and 100% invested in assets that can grow, and hope I never need to use their customer service. :O

[mikealias]

I'm currently invested in the intelligent advisor. Haven't had any major issues. It seems like the biggest benefit is the tax loss harvesting. Still, I wonder if I would be better off just investing in Vanguard's SP500 and some bonds. What do you think?

[SSteelification]

I'll stick with my schwab portfolio thats 4 mutual funds. Its been decent in all honesty.

[jeffwrightslc]

Jumping on the latest shiny object is one of the biggest pitfalls of a poor investment strategy. Understanding Index funds and ETFs is a great way to avoid that pitfall.
The last shiny object is the explosion of Tesla (a great stock!). The problem is that anything that can jump up can also free fall with a challenge. AVOID the turbulence of buying bright shiny objects.
Education is so important in becoming a great investor!
You do a wonderful job of providing great background education.

[springteen]

Is swhuab intelligent portfolio also a bank as betterment?

[StepBackJay]

I have 2 IRAs in IP's w/same balance but one did much better than the other one over 4 years. My issue is do these portfolios actually do any better than a single S&P 500 index when you look at a 10 yr period? So far my experience is that they don't

[ikal]

this was really good. have my like and subscription!

[wendell]

*I just opened a Charles Schwab brokerage account. Although I still plan to be moderately passive with it, maybe the intelligent portfolio would limit me.*

[jordanmuegge]

Yes I’m considering using the schwab intelligent portfolio and I did learn something from the video. Thank you!🙏🤙