Automatic brokerage sell and $ transfer

[JackJester]

My Niece age 33 recently received an inheritance. She wants me to build a portfolio for her at Schwab in a brokerage account … which I am happy to do. She wants a monthly income stream. But she also does not want to sell any funds herself or worry about transferring $ from Schwab to her local checking account. Ideally what I would do is set up an automatic monthly sell of specific funds for x $, and have an automatic monthly transfer of the cash in Schwab to her bank account. Does anyone know if this is possible? I see that Schwab has something called “Schwab intelligent income.” Link below. Sounds like it’s a glorified FIRECalc plus some of this automation, but not sure. I’m not looking to pay for something, just want to set up some automation, but maybe I have to pay for this ‘convenience’. I’m fine with doing an annual rebalance of her portfolio (until I teacher her) but don’t want to manage it on a monthly basis. We’re talking about a $750k portfolio and about a $30k annual withdrawal over 20-30 yrs… like the FIRECalc defaults. Any ideas or feedback? Thx much. In the long run I want to teach her to manage her own portfolio, but I can’t throw her into the fire right away.

https://www.schwab.com/automated-investing/income-in-retirement

 

[mn54]

why don't you build a portfolio with 720K. put 30K into a cma account which she can spend down over a year. my cma at fido is earning 5%. once a year replenish the cma with 30K from the portfolio.

 

[OldShooter]

Ideally there is a Schwab office that you and your niece can visit and get your questions answered. IMO this is best done face-to-face, but if no office then you can try one of the customer support lines and hope for the best.

If none of that works out, PM me some contact information and I will have my Schwab rep help you or put you in contact with someone with that responsibility. Unfortunately (unless it has changed recently) Schwab does not assign named reps to clients with less than $1M of household assets at Schwab.

Trying to figure this out on your own or by consulting SGOTI is not the best way to go.

 

[SecondCor521]

Vanguard can do it, so I assume Schwab can also.

Vanguard calls it, unsurprisingly, their Automatic Withdrawal Plan. You can set it up online - amount, frequency, start/stop, and destination.

 

[Peter]

Vanguard can do it, so I assume Schwab can also.

Vanguard calls it, unsurprisingly, their Automatic Withdrawal Plan. You can set it up online - amount, frequency, start/stop, and destination.

I don't think this is possible with Schwab. At least, that's what my rep says. My solution is to keep a balance at Ally and do the monthly transfer from there.



As stated by SecondCor, Vanguard can do it. I'm pretty sure Fidelity can as well. Does your niece have to use Schwab?

 

[TheWizard]

I'll be contrary.
At age 33, that niece should NOT be withdrawing money from that inheritance on a regular basis but instead should be keeping it invested for eventual retirement 25+ years in the future.

Feel free to correct me if there are unmentioned details that make a difference in this...

 

[mrfeh]

I'll be contrary.
At age 33, that niece should NOT be withdrawing money from that inheritance on a regular basis but instead should be keeping it invested for eventual retirement 25+ years in the future.

Feel free to correct me if there are unmentioned details that make a difference in this...

+1

If she was supporting herself before, why draw on the inheritance?

 

[marko]

I'll be contrary.
At age 33, that niece should NOT be withdrawing money from that inheritance on a regular basis but instead should be keeping it invested for eventual retirement 25+ years in the future.

...

+1

If she was supporting herself before, why draw on the inheritance?

Well, this IS the "early retirement forum". Some folks here have retired or semi retired on less.

Maybe she would like to take few years off, travel and get back to work later? 25+ years would put her at 58 or older....not what I'd call a really early retirement.

Maybe just a few more bucks lets her move from "supporting herself" to "living well" with a little cushion.

 

[nvestysly]

That amount of money can easily generate dividends well in excess of $30k per year. My thought is similar to others... put $30k in cash at the beginning and let the dividends add to that cash every quarter, while paying out cash to a checking account every month (or twice a month).

But, like others, why is she (at a relatively young age) using this money to live on? Letting it grow for 5 - 7 years and it could double. Is she aware of that? Heck, just putting it into the SPY ETF for the past several years would do well if the dividends are reinvested.

Be sure to let her know all the options - she may not be thinking - may not understand how investments grow over time and doubling $750k to $1.5M might be a game-changer for her. Heck, 1.5 to 3.0 may be just the ticket if she has enough time. Pretty soon she'd be talking real money!

Any time DW and I received money as a gift - birthday, anniversary, Christmas, etc. the money was reinvested. Same with salary increases. If we lived on the smaller amount yesterday we can continue to live on that amount today. It's surprising how quickly investments grow with that approach.

 

[pb4uski]

What I would do is to set up an online savings account with $30k and a monthly transfer to her checking account of $2,917 and invest $720k in Schwab in a 5 or 10 year rolling CD ladder. You should be able to get over 4% from the online savings account and over 5% yield from the CD ladder.

Then periodically replenish the online savings account with money from the Schwab account.

 

[mrfeh]

What I would do is to set up an online savings account with $30k and a monthly transfer to her checking account of $2,917 and invest $720k in Schwab in a 5 or 10 year rolling CD ladder. You should be able to get over 4% from the online savings account and over 5% yield from the CD ladder.

Then periodically replenish the online savings account with money from the Schwab account.

Here's another opinion...somebody that's 33 should be investing for the long haul, which means most of the money should be in equities.

Total market fund.

 

[JoeWras]

Maybe niece has a plan and wants to enjoy "surprise money."

I'm glad we saved and retired early, but sometimes I have regrets about being so damn cheap when I was in the 30s.

Blow. That. Dough.

 

[pb4uski]

What I would do is to set up an online savings account with $30k and a monthly transfer to her checking account of $2,917 and invest $720k in Schwab in a 5 or 10 year rolling CD ladder. You should be able to get over 4% from the online savings account and over 5% yield from the CD ladder.

Then periodically replenish the online savings account with money from the Schwab account.

Here's another opinion...somebody that's 33 should be investing for the long haul, which means most of the money should be in equities.

Total market fund.

Fair point, the OP didn't indicate what the niece wanted for an AA or how much equity exposure she wanted but the approach could be used with any AA and adjusted by just adding the desired amount of equities in a broad based domestic stock ETF and reducing the CD ladder accordingly.

 

[target2019]

My Niece age 33 recently received an inheritance. She wants me to build a portfolio for her at Schwab in a brokerage account … which I am happy to do. She wants a monthly income stream. But she also does not want to sell any funds herself or worry about transferring $ from Schwab to her local checking account. Ideally what I would do is set up an automatic monthly sell of specific funds for x $, and have an automatic monthly transfer of the cash in Schwab to her bank account. Does anyone know if this is possible? I see that Schwab has something called “Schwab intelligent income.” Link below. Sounds like it’s a glorified FIRECalc plus some of this automation, but not sure. I’m not looking to pay for something, just want to set up some automation, but maybe I have to pay for this ‘convenience’. I’m fine with doing an annual rebalance of her portfolio (until I teacher her) but don’t want to manage it on a monthly basis. We’re talking about a $750k portfolio and about a $30k annual withdrawal over 20-30 yrs… like the FIRECalc defaults. Any ideas or feedback? Thx much. In the long run I want to teach her to manage her own portfolio, but I can’t throw her into the fire right away.

https://www.schwab.com/automated-investing/income-in-retirement

I am a Schwab investor. Our brokerage has a linked checking account. When I need cash for a check or payment, I manually transfer from brokerage sweep to checking.

We also have a manual transfer link between brokerage and an external bank account. That can be a puch or pull. But the cash must be available in the sweep.

TBH, if she doesn't want to carry out a few clicks, look for alternatives. Then you can show her with hard facts the cost of automatic at one institution vs. another.

You'll also find that Schwab's robo-type accounts will hold a much larger amount of cash than she'd like.

OTH, she needs to learn a few things, as you mentioned. Maybe this is a good time to talk with her about future expectations. If this were my kid, then I might go in the direction of setting aside one day in early January to take a peek, look at allocation, and rebalance. Part of that would include withdrawing 30K to checking.

I would make an appointment and talk to Schwab rep about this, just to make sure I'm not missing anything.

 

[OldShooter]

Take her with you to Schwab.