Since you've made this video, (it is now Aug 2022 as I"m writing this) Schwab is now paying about 2.1% on the cash position in the portfolio since the Fed has raised the Federal Funds Rate.
Yeah, when they say "view prospectus" instead of just telling you, something is being semi-hidden. But anyone who really believes that these are really and totally free, they are on a different planet.
Great video, thanks. One additional point about the proprietary SoFi funds is that you might not be able to transfer those “in kind” to another brokerage if you want to leave SoFi. Selling them to transfer would force you into realizing a capital gain. Only applicable in a taxable account, but it creates another disincentive in my mind.
Rob - I've got some of my savings in Schwab. You are correct with your assessment of their method of keeping cash available to them when you use their portfolio builder. My way around that is to just go back in for a second round of investing, and then use that reserved cash as the basis amount to invest in round 2. The Robo assistant will again reserve cash, but it is a percentage of the first percentage. Ultimately you can invest most of your account into securities, but there is no way to avoid having some amount of cash reserved on the sidelines. They always reserve a percentage.
Thank you! So timely, I was just about to get a robo account with Schwab. I also do not like the not transparency of the forced cash mandate. Going to rethink. I have money in cash account and want to invest it.
I had thought about getting my mom to move her account to Schwab, but she needs all of her account value to work for her. I have a brokerage account with them and I like the interface so Schwab is still a good option for a self managed account
I use Schcwab and doing great, even with the latest market conditions. Also, when down, it is very little. As for cash, is our cash. So, when they adjust the portfolio, that cash is used to rebalance, readjust, or whatever is called. So the amount of cash changes. I am honestly very happy so far. Remember, you answer those questions, and they work for you.
I have been with Schwab for about 10-years now, and last year I pulled all of my investments away from them and I am now doing it myself just because of that (still use the platform), but I got tired of seeing thousands and thousands of dollars just sitting there in cash reserve, and I always figured that they were doing something with my cash to benefit themselves.
Brokers lend your money to customers buying on margin. Look at the spread between their margin rates and the interest they pay on cash balances. It's very profitable.
Have been interested in health sector for a while , but I’m inclined more towards an ETF or an index fund rather than individual stocks . Can we discuss some of the options you find interesting ?
Thank you very much for your transparency, honesty and courage Rob. I was wondering, what are your thoughts on covered call ETFs for income in retirement? I would appreciate your response. Thanks
Hi Rob, my question concerns Schwab's Robo investing. I have 12 ETFs, the expense ratios range from .03 to .49, if I add them up and divide by 12, it comes out to .195. My question is, should I use the the average exp. ratio to determine overall fee's or is there another way to do it that is more accurately?
Just found your channel. Love the content. As far as cash in robo accounts, very interesting. I always wondered why they needed to keep so much in cash. It's not like they are waiting for a buying opportunity. But can't you think of it as part of your overall cash allocation? Even though you really will never be able to withdrawal it because they will just sell something to maintain that percent in cash. Hope to catch you live soon.
Thank you for another great and informative video... Some people think that Mutual Funds and ETF's are heading into a really big bubble that's about to pop. Would you say that cherry picking individual stocks is better ?
What are your thoughts on Wealthfront, now that they have gotten purchased by UBS? I see Betterment is your preferred, despite their overweighting on international and developing economy equities and debt.
@@rob_berger I sent a note to Wealthfront on the UBS purchase. In particular I cited the fact that they seem to be oriented to ultra wealthy clients, and have a somewhat chequered history (destruction of records of WWII unclaimed accounts, facilitating tax evasion) and got no reply. When I made a phone call, I had the impression from the person who answered that I had interrupted her day. She explained that I got no response because my inquiry was not in the form of a question. The support part of Wealthfront is on a site with a separate URL, never seen that. The only reason I put money into Wealthfront was because Burton Malkiel was associated. As far as I can tell the UBS purchase was an alternative to an IPO. I don't see any advantage for the client.
Nothing is ever free. I think this kind of practice is the cost for playing in a particular brand's financial ecosystem. However, it's highly frustrating when it's hidden in any way. Since I invest with SOFI, I'll send them a message about this.
I'm torn between fidelity go and betterment. betterment has a better user interface but fidelity doesn't tilt for value and I'm uncertain whether tilting is justified. I've heard the theories but looking at the results, fidelity is beating them in performance. and if I'm not mistaken John Bogle favored just being the market over tilting because that's like stock picking lite. I'd be curious to see a comparison of betterment vs fidelity on performance as well as pros and cons of each portfolio. I know performance isn't everything. if it was you might think tqqq was a better choice than vti even though it's not. so maybe betterment is right and on the long run will be vindicated. I'm no expert so don't know. I do know I don't have much money and so hope to squeeze whatever realistic reliable growth I can to make the most of what I can afford to save. also want whoever I pick to still be around in 20 years. doing 401k now but plan to start a roth in a month or two using likely betterment or fidelity. still torn.
I looked at my 401k and the S&P 500 index that my company provides has .48 in cash. I work for a huge company too. I wonder if most 401k's have something similar if you aren't with purely Vanguard. This isn't a Vanguard fund.
@@SKITTLELA I checked my Vanguard Total Stock Market I hold through Vanguard and it has nothing listed for short-term reserves. The Vanguard 500 also has nothing listed for short-term reserves. So I guess they don't have any cash.
@@rob_berger It looks like I am stuck with it now unless I want to sell when I leave my company but I could lose some in the process. I could also gain a bit. I list about 900.00 when I moved my Fidelity 401k to Vanguard because I didn't want so many accounts. I wish I had kept the Fidelity because it is easier to move money within the 30 day period if you sell. If I sell an S&P500, I have to wait 30 days to buy it back within the Vanguard ira. I can buy in my brokerage if I want.
thanks Rob - question: I’m retired at 65 and am invested in The Golden Butterfly Portfolio (20% each of TLT, SHY, VTI, VBR and GLD) - any thoughts would be appreciated 🙂
Solid. A bit more expensive on management fees, but not by much. And they use Fidelity Flex funds with 0% expense ratios. I've not explore the performance of these funds, however.
So the cost of being invested in Schwab is not a direct cost but the opportunity cost of not being fully invested in the market. By that logic, given Berkshire Hathaway keep almost 30% of its portfolio in cash, a greater percentage than even the most conservative Schwab portfolio, it is considerably more expensive than Schwab.
Well, BRK is an operating business with a need for cash. Totally different. In addition, its history of performance over the past 6 decades is extraordinary. Unlikely that Schwab Intelligent Portfolios will challenge that record.
Rob: love your content but you have a sound problem! Every time you slightly land on your table there is a drum-type sound which is really distracting, noticed this in all of your recent productions. You may have your mic somehow on the table. Otherwise, great show! Thanks for doing what you do.
All fees considered, Schwab’s is still the lowest cost robo out there. Also, they don’t hide the cash allocation so you know exactly what you’re getting. The ETFs it holds are among the lowest in each respective asset class. It’s the ultimate lazy person portfolio.
I'm not so sure it is the lowest cost, even putting aside free services such as M1 Finance. Vanguard's digital service comes in at about 15 basis points. I suspect the cash positions in some of Schwab's portfolios could cost a lot more than that.
Since you've made this video, (it is now Aug 2022 as I"m writing this) Schwab is now paying about 2.1% on the cash position in the portfolio since the Fed has raised the Federal Funds Rate.
Yeah, when they say "view prospectus" instead of just telling you, something is being semi-hidden. But anyone who really believes that these are really and totally free, they are on a different planet.
I appreciate the mix of single-topic videos and the live chats. Thanks for putting these together!
O-H
Great information. I agree, we should always be careful when the word "free" is used.
Great insight on the "free" robo advisors. And I like these shorter videos!
Great video, thanks. One additional point about the proprietary SoFi funds is that you might not be able to transfer those “in kind” to another brokerage if you want to leave SoFi. Selling them to transfer would force you into realizing a capital gain. Only applicable in a taxable account, but it creates another disincentive in my mind.
Rob - I've got some of my savings in Schwab. You are correct with your assessment of their method of keeping cash available to them when you use their portfolio builder. My way around that is to just go back in for a second round of investing, and then use that reserved cash as the basis amount to invest in round 2. The Robo assistant will again reserve cash, but it is a percentage of the first percentage. Ultimately you can invest most of your account into securities, but there is no way to avoid having some amount of cash reserved on the sidelines. They always reserve a percentage.
Thank you! So timely, I was just about to get a robo account with Schwab. I also do not like the not transparency of the forced cash mandate. Going to rethink. I have money in cash account and want to invest it.
I had thought about getting my mom to move her account to Schwab, but she needs all of her account value to work for her. I have a brokerage account with them and I like the interface so Schwab is still a good option for a self managed account
Ally Invest Robo does this as well. I thought about both of them, but decided to go with Vanguard.
Hi Rob, i was reading your article, and there is a typo in the "Methodology" Title. Great content by the way!
That's funny. Thanks.
Well, we all know there is no "free lunch", it has to come out of somewhere
I use Schcwab and doing great, even with the latest market conditions. Also, when down, it is very little. As for cash, is our cash. So, when they adjust the portfolio, that cash is used to rebalance, readjust, or whatever is called. So the amount of cash changes. I am honestly very happy so far. Remember, you answer those questions, and they work for you.
Can you do a video on Robo-Advisors? Thanks
What about that "Fee Waiver" in the prospectus?
That 6% is my emergency fund
I have been with Schwab for about 10-years now, and last year I pulled all of my investments away from them and I am now doing it myself just because of that (still use the platform), but I got tired of seeing thousands and thousands of dollars just sitting there in cash reserve, and I always figured that they were doing something with my cash to benefit themselves.
Brokers lend your money to customers buying on margin. Look at the spread between their margin rates and the interest they pay on cash balances. It's very profitable.
Where would you suggest parking cash or do you put any near term obligations in the market?
It’s 2023 and I have Schwab Intelligent portfolio last time I check my cash is making 4.%
Good news cause I was in Schwab office today considering intelligent portfolio.
M1 is the best free "robo advisor" with all their awesome pies. So many options for every investor
Have been interested in health sector for a while , but I’m inclined more towards an ETF or an index fund rather than individual stocks . Can we discuss some of the options you find interesting ?
Thank you very much for your transparency, honesty and courage Rob. I was wondering, what are your thoughts on covered call ETFs for income in retirement? I would appreciate your response. Thanks
Hi Rob, my question concerns Schwab's Robo investing. I have 12 ETFs, the expense ratios range from .03 to .49, if I add them up and divide by 12, it comes out to .195. My question is, should I use the the average exp. ratio to determine overall fee's or is there another way to do it that is more accurately?
Just found your channel. Love the content. As far as cash in robo accounts, very interesting. I always wondered why they needed to keep so much in cash. It's not like they are waiting for a buying opportunity. But can't you think of it as part of your overall cash allocation? Even though you really will never be able to withdrawal it because they will just sell something to maintain that percent in cash. Hope to catch you live soon.
Great info! Have you adjusted your portfolios in current market? for an example, add energy and or commodity stocks to it ? thanks
Being evasive about fees is lying by another name and I try not to reward dishonest companies with my business.
Thank you for another great and informative video... Some people think that Mutual Funds and ETF's are heading into a really big bubble that's about to pop. Would you say that cherry picking individual stocks is better ?
What are your thoughts on Wealthfront, now that they have gotten purchased by UBS? I see Betterment is your preferred, despite their overweighting on international and developing economy equities and debt.
I like the service a lot. Still not sure yet how UBS will affect things.
@@rob_berger I sent a note to Wealthfront on the UBS purchase. In particular I cited the fact that they seem to be oriented to ultra wealthy clients, and have a somewhat chequered history (destruction of records of WWII unclaimed accounts, facilitating tax evasion) and got no reply.
When I made a phone call, I had the impression from the person who answered that I had interrupted her day. She explained that I got no response because my inquiry was not in the form of a question.
The support part of Wealthfront is on a site with a separate URL, never seen that.
The only reason I put money into Wealthfront was because Burton Malkiel was associated.
As far as I can tell the UBS purchase was an alternative to an IPO. I don't see any advantage for the client.
Nothing is ever free. I think this kind of practice is the cost for playing in a particular brand's financial ecosystem. However, it's highly frustrating when it's hidden in any way. Since I invest with SOFI, I'll send them a message about this.
I'm torn between fidelity go and betterment. betterment has a better user interface but fidelity doesn't tilt for value and I'm uncertain whether tilting is justified. I've heard the theories but looking at the results, fidelity is beating them in performance. and if I'm not mistaken John Bogle favored just being the market over tilting because that's like stock picking lite. I'd be curious to see a comparison of betterment vs fidelity on performance as well as pros and cons of each portfolio. I know performance isn't everything. if it was you might think tqqq was a better choice than vti even though it's not. so maybe betterment is right and on the long run will be vindicated. I'm no expert so don't know. I do know I don't have much money and so hope to squeeze whatever realistic reliable growth I can to make the most of what I can afford to save. also want whoever I pick to still be around in 20 years. doing 401k now but plan to start a roth in a month or two using likely betterment or fidelity. still torn.
I looked at my 401k and the S&P 500 index that my company provides has .48 in cash. I work for a huge company too. I wonder if most 401k's have something similar if you aren't with purely Vanguard. This isn't a Vanguard fund.
That's not unusual.
@@rob_berger I've noticed that also. Doesn't this mean practically every mutual fund in existence has "unnecessary" cash drag?
@@SKITTLELA I checked my Vanguard Total Stock Market I hold through Vanguard and it has nothing listed for short-term reserves. The Vanguard 500 also has nothing listed for short-term reserves. So I guess they don't have any cash.
@@rob_berger It looks like I am stuck with it now unless I want to sell when I leave my company but I could lose some in the process. I could also gain a bit. I list about 900.00 when I moved my Fidelity 401k to Vanguard because I didn't want so many accounts. I wish I had kept the Fidelity because it is easier to move money within the 30 day period if you sell. If I sell an S&P500, I have to wait 30 days to buy it back within the Vanguard ira. I can buy in my brokerage if I want.
thanks Rob - question: I’m retired at 65 and am invested in The Golden Butterfly Portfolio (20% each of TLT, SHY, VTI, VBR and GLD) - any thoughts would be appreciated 🙂
What do you think about fidelity robo index fund?
Solid. A bit more expensive on management fees, but not by much. And they use Fidelity Flex funds with 0% expense ratios. I've not explore the performance of these funds, however.
So the cost of being invested in Schwab is not a direct cost but the opportunity cost of not being fully invested in the market. By that logic, given Berkshire Hathaway keep almost 30% of its portfolio in cash, a greater percentage than even the most conservative Schwab portfolio, it is considerably more expensive than Schwab.
Well, BRK is an operating business with a need for cash. Totally different. In addition, its history of performance over the past 6 decades is extraordinary. Unlikely that Schwab Intelligent Portfolios will challenge that record.
No free lunch
SoFi has waived the fees for an indeterminate amount of time on their etfs… so it is free now, but no one knows when it will stop being free
Thanks for sharing this.
@ETF- IT if you look a couple of lines down from where it shows the cost on the prospectus in this vid you will see it.
@@rob_berger thanks for the videos! I’ve learned a lot!
Sketchy for sure...
Rob: love your content but you have a sound problem! Every time you slightly land on your table there is a drum-type sound which is really distracting, noticed this in all of your recent productions. You may have your mic somehow on the table. Otherwise, great show! Thanks for doing what you do.
Thanks. Just ordered a new mic and boom pole which should fix the issue.
All fees considered, Schwab’s is still the lowest cost robo out there. Also, they don’t hide the cash allocation so you know exactly what you’re getting. The ETFs it holds are among the lowest in each respective asset class. It’s the ultimate lazy person portfolio.
I'm not so sure it is the lowest cost, even putting aside free services such as M1 Finance. Vanguard's digital service comes in at about 15 basis points. I suspect the cash positions in some of Schwab's portfolios could cost a lot more than that.
Dress Shirts always trump Undershirts....just sayin'. ;)