Portfolio Customization Tips

Whether your Schwab Intelligent Portfolios^® account is helping you achieve your financial goals or you're still deciding on your investment strategy, here are a variety of ways you can personalize your portfolio along with key feature benefits and activation tips.

Investment strategies offer you a way to tailor your portfolio towards more global, U.S., or income-oriented investments. Note that U.S.-focused strategies are not available for those who want enroll in Schwab Intelligent Income.

Schwab Intelligent Portfolios offers you a choice among three investment strategies: Global, U.S. Focused and Income Focused. Each strategy helps provide access to a well-diversified portfolio of stocks, fixed income, commodities and cash based on your investment goal, time horizon and comfort level with risk. These factors drive individual portfolio allocations with a range of different risk profiles from aggressive portfolios with an emphasis on stocks to conservative portfolios with an emphasis on fixed income and cash.

• Global strategies: Our primary approach to portfolio diversification is designed to offer broad and well-diversified exposure to domestic, international and emerging market economies. We believe global diversification may have expanded investment opportunities for growth because it helps reduce concentration in one geographical region.
• U.S.-focused strategies: We also offer strategies with less exposure to international economies for investors with a preference for U.S.-domiciled investments. While we believe that the U.S. isn't the only game in town, we understand the desire for a "home bias" and the familiarity with and preference for more developed economies (e.g., the domestic-focused strategies don't have any allocation to emerging markets). 
• Income-focused strategies: These portfolios feature investments that pay out a higher percentage of their earnings to investors in the form of interest or dividend payments. These strategies include more exposure to so-called "blue-chip" companies and also include higher yielding asset classes such as preferred stocks, bank loans and other short-term floating-rate notes. The income-focused strategies can be a suitable choice for both saving toward a goal or withdrawing money.

• Mobile: Log in → Tap SIP account → Scroll down to Portfolio Settings → Tap Model Preference → Tap Edit Preference
• Web: Log in → Settings → Model Preference/Edit Preference

Municipal bond variations can allow for tax advantages with federally tax-exempt interest. Municipal bonds typically pay out less interest than comparable fixed income alternatives but, depending on your tax situation, can offer attractive after-tax returns.

We offer versions of each of our investment strategies with federally tax-exempt municipal bonds for taxable accounts. Depending on where you live, bond interest may also be exempt from state income taxes. We swap out the fixed-income allocations to U.S. Treasuries, corporate bonds and agency mortgage-backed securities for investment-grade municipal bonds. For Californians, we offer a version concentrated in California-specific municipal debt.

• Mobile: Log in → Tap SIP account → Scroll down to Portfolio Settings → Tap Model Preference → Tap Edit Preference
• Web: Log in → Settings → Model Preference/Edit Preference

We make it easy to update your risk profile when changes happen such as a substantial increase or decrease in income or your investment time horizon shifts. For example, if you have the ability to be more aggressive with the investments in your account, changing your risk profile can recommend a more aggressive portfolio that aligns more closely with your preferences.

We've designed a way to help you adjust your risk profile if significant events change your tolerance or capacity to take on risk. Simply update the answers to your Investor Profile Questionnaire so that Schwab Intelligent Portfolios can recommend a new portfolio allocation that better fits your needs.

• Mobile: Log in → Tap SIP account → Scroll down to Portfolio Settings → Tap Review Investment Profile → Tap Review Profile
• Web: Log in → Settings → Redefine Investment Profile/Review Profile

Tax-loss harvesting can be used to offset up to $3,000 of ordinary income and recognized capital gains annually by allowing investors to retain a similar market exposure while generating deductions for federal income tax purposes. Additional captured losses can be carried forward into future years if not used in the year they occurred. Periods of elevated market volatility highlight the potential benefit of tax-loss harvesting as the number of these trades has historically surged when markets turn turbulent.¹ Tax-loss harvesting automates a complicated and time-consuming process so you don't have to do it on your own.

Taxable accounts with at least $50,000 in investable assets are eligible. If your taxable account is less than $50,000, you can still opt in for tax-loss harvesting. When your account reaches $50,000 in value, tax-loss harvesting will become active. Tax-loss harvesting will remain an active feature on your account until your account value drops below $40,000. If that happens, the balance will need to rise back above $50,000 to automatically reactivate.

Tax-loss harvesting is a service that checks your accounts daily for opportunities to sell investments where you have an unrealized loss and simultaneously reinvest the proceeds of the sale into a pre-selected alternate ETF in the same asset class. This means that the current price of the investment is lower than the original price paid for it. The goal of this feature is to maintain a portfolio that closely tracks your portfolio's asset allocation and captures tax-deductible losses while generally preventing wash sales in your account.

• Mobile: Log in → Tap SIP account → Scroll down to Portfolio Settings → Tap Tax Loss Harvesting
• Web: Log in → Settings → Tax Loss Harvesting

Customize your portfolio by removing up to three ETFs, regardless of whether we currently hold the investment or not. For example, you might wish to exclude an ETF included in the program if you potentially hold the same ETF in a different account and are concerned about potential wash sales across the accounts. We have an alternate ETF for every asset class so if you choose to restrict an ETF, there's a backup to help keep your investment mandates on track. If you exclude an ETF in an asset class, your account will hold the alternate ETF in that asset class, and tax-loss harvesting would not be possible. Note that you can exclude either the primary or the secondary ETF in an asset class, but not both.

If we are currently invested in an ETF on your exclusion list, we'll sell any current holdings in that investment and buy an alternate ETF to keep your portfolio allocations and risk target consistent. If we do not currently invest in your excluded investments, our rebalancing algorithm will make sure to never invest in them in your account, regardless of how your risk profile or strategy change. If you change your mind, you can always adjust your exclusion list.

• Mobile: Log in → Tap SIP account → Scroll down to Portfolio Settings → Tap Exclusion List
• Web: Log in → Settings → Exclusion List

With Schwab Intelligent Portfolios Premium, unlimited, one-on-one guidance from a CFP^® professional provides assistance to you in creating a road map for reaching your financial milestones, including saving for college, retirement or buying a house. Digital planning tools help you create "what-if" scenarios with the Play Zone^® and stress-test your plan by adjusting variables like retirement age, saving rates, and lifestyle choices. Additionally, you can conduct scenario analysis to see how your financial plan could hold up against changes in variables that are out of your control. You can also see the impact of market cycles, inflation, portfolio returns, long-term care costs and other unexpected expenses. Pay a one-time planning fee of $300 and a $30 per month advisory fee after that for access to this feature. Schwab Intelligent Portfolios Premium is available to accounts with at least $25,000 in initial investable assets.

If you need help managing multiple financial goals, you might benefit from the one-on-one professional guidance that Schwab Intelligent Portfolios Premium provides. You'll have access to the same features of Schwab Intelligent Portfolios with unlimited professional guidance and planning from a CERTIFIED FINANCIAL PLANNER™ professional. There's also access to interactive online planning tools and a personalized roadmap to help you reach your goals.

• Web: Log in → Explore Premium (left navigation menu)

By Jack Hanna, Senior Specialist with Charles Schwab Investment Advisory, Inc.