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Schwab Managed Portfolio (SMP) Anyone?
Old 08-25-2012, 09:50 AM   #1
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Schwab Managed Portfolio (SMP) Anyone?

I'm considering retiring Jan. '13 and putting about $1.3M in retirement funds (currently in CD's and 401k plan) into SMP - Balanced portfolio - moderate risk (50% stocks/50% fixed income/bonds) versus paying 1.0% to 1.25% to a wealth management company , like Raymond James, Fidelity, etc. (Schwab is .35% and .50%).

For now, I hoping to get a 5% gross return. I plan on drawing down about $70k/yr. for 22 years (with increases each yr. for 3% inflation) and I'll have adequate funds for 2 years downmarket (kids will get house and what ever is left over in cash). If anyone out there has been in the Schwab Managed Portfolio or with a wealth management company, what are the major differences? I don't mind paying higher fees if the returns justify it. Any advice or guidance relative to your experience would be appreciated. Many many thanks.
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Old 08-25-2012, 10:18 AM   #2
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Hi,
There is alot of great info here on this site and you might start reading the forum and library over at boggle. I bit on the schwab managed portfolio a few years back. i went with the eft only. I learned a bit from them but dropped them after a year. i found it dumb to pay a fee over the amount the etfs charged and also it was not tax efficent as I had to pay taxes on a loosing year.

I now am putting everything in scwab etf index funds...schb scha schz schp schh schb...to name a few...very low expenses. I do have 30% of my portfolio in vwinx a very good fund (65% bonds).

This move thanks to many here at this site has been very positive.

I would like to here from others as to when to put your money in ie dollar cost average? as the market is currently at a bit of a high
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Old 08-25-2012, 04:58 PM   #3
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Quote:
Originally Posted by bayou1312 View Post
I plan on drawing down about $70k/yr. for 22 years (with increases each yr. for 3% inflation)
I'm curious about the precision of your number. Why 22 years?
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Old 08-26-2012, 05:57 AM   #4
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Not in SWP, but most of my money is at Schwab. Their site is very helpful.

My recommendation is to take the fees you would pay and pay yourself to learn enough that you will feel comfortable investing on your own. Index funds are a great place to start. I use them for most of my portfolio, but keep about 10% of portfolio to pick individual stocks, mostly for fun, to see if I can beat the index. I'm lagging the index YTD.....we'll see what happens over the next few years.
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Old 08-26-2012, 06:27 AM   #5
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Quote:
Originally Posted by bayou1312 View Post
I'm considering retiring Jan. '13 and putting about $1.3M in retirement funds (currently in CD's and 401k plan) into SMP - Balanced portfolio - moderate risk (50% stocks/50% fixed income/bonds) versus paying 1.0% to 1.25% to a wealth management company , like Raymond James, Fidelity, etc. (Schwab is .35% and .50%).
Why don't you pick a similar portfolio of funds from Fidelity or Vanguard. Your expenses could then be close to 0.1% or even lower with Vanguard Admiral funds.
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Old 08-26-2012, 04:14 PM   #6
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I'm at Schwab - as is my sister. She can't be bothered - so she's in the SMP. It works for her.
I'm doing a boglehead style 4 fund portfolio - with Schwab index funds.

One of the things I didn't like about the SMP - you have to be 100% hands off. If you want your money you go through your schwab financial advisor and they get you the money. If something catastrophic were to happen - I'd want access to the money quicker than that.

It can seem scary, at first, to be in charge of your investments... but over time you realize that it's even scarier to let someone else be in charge. I really like the idea of chosing an asset allocation - then buying INDEX mutual funds (low cost and diversification) to accomplish that asset allocation.
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Old 08-26-2012, 07:27 PM   #7
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Why don't you pick a similar portfolio of funds from Fidelity or Vanguard. Your expenses could then be close to 0.1% or even lower with Vanguard Admiral funds.
I don't think you're answering the question that OP is asking. OP could buy index funds with 0.1% or lower ER's right at Schwab without the need to move everything to Vanguard or Fidelity. The question is whether to pay a higher ER (.35 to 0.5) for what amounts to an automatic rebalancing service.

To OP: You can save several kilobucks a year doing it yourself. It's not all that complicated and the knowledge would serve you well throughout your retirement. If you just "can't" for whatever reason, Schwab's program is as good as any in terms of avoiding the risk of a salesperson managing your portfolio to maximize their commissions.
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