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 Post subject: Schwab Mutual Fund OneSource Select List...
PostPosted: Sat Jun 23, 2007 2:41 pm 

Joined: Sat Jun 09, 2007 12:45 pm
Posts: 45
Hello,

I recently opened up a Schwab checking account that pays the 4.25% APY, and I have been looking at other investments on their site as well. One of those is the Schwab Mutual Fund OneSource. When I spoke to them over the phone, they told me all it takes to open a OneSource account is $100.00 and that it is a no load/no fee account. They did say that in order to avoid fees the account has to be kept for at least 90 days or else they charge some sort of "early termination" fee.

My question is, would this be a good option for a starting point when it comes to investing? And if so, which category should I invest in? They have the following categories for the select list:

Large-Cap U.S. Stock
Small- & Mid-Cap U.S. Stock
International
Specialty
Taxable Bond
Tax-Free Bond
Additional Fund Categories

I realize that what category I invest in would depend on how much risk I am willing to accept with the investment. Any thoughts or ideas?

Korey


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PostPosted: Sun Jun 24, 2007 4:17 pm 

Joined: Fri Apr 20, 2007 10:17 am
Posts: 25
Location: Minneapolis, MN
I'm also interested in hearing what people have to say about this. I also just got a schwab investor checking account


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PostPosted: Sun Jun 24, 2007 10:48 pm 

Joined: Sat Apr 07, 2007 2:03 am
Posts: 872
Location: Taishan, Guangdong, China
Unfortunately, going through the NTF fund options at Schwab (or any other brokerage) is quite the chore. Going through thousands of funds to try to find the best of each category -- a lot of work when you eliminate Vanguard, Fidelity and T.Rowe Price from the equation. Luckily, somebody has done all this work for us:

http://www.fundadvice.com/portfolio.html#schwabequity

Quote:
10% Schwab 1000 (SNXFX)
10% Soundshore Fund (SSHFX)
10% Schwab Small Cap Index (SWSMX)
10% Heartland Value Plus (HRVIX)
10% Cohen Steers Realty Shares (CSRSX)
10% Schwab International Index (SWINX)
10% Dodge and Cox International Stock (DODFX)
10% Lazard Int'l Small Cap Open (LZSMX)
10% Tocqueville International Value (TIVFX)
10% American Century Emerg. Mrkt (TWMIX)


I'd start with that and see if there's anything else that piques your fancy.


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 Post subject: re: Schwab Mutual Fund OneSource Select List...
PostPosted: Mon Jun 25, 2007 5:15 am 

Joined: Sat Jun 09, 2007 12:45 pm
Posts: 45
MossySF (or anyone, really),

What does NTF stand for? Is that, by chance, Non-Traded Funds? Just a guess on my part. Is there a real disadvantage to investing in these types of funds (NTF), other than it requiring a lot of research?


Korey :D


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PostPosted: Mon Jun 25, 2007 5:31 am 
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Joined: Thu Apr 05, 2007 4:19 am
Posts: 395
Location: New Jersey
NTF = No Transaction Fee


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PostPosted: Mon Jun 25, 2007 10:53 am 
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Joined: Thu Apr 05, 2007 6:30 am
Posts: 336
Location: Houston, TX
Note to the casual reader: I don't believe Mossy's list was intended to be a recommendation to buy all 10 funds.

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PostPosted: Mon Jun 25, 2007 12:00 pm 

Joined: Sat Apr 07, 2007 2:03 am
Posts: 872
Location: Taishan, Guangdong, China
tinyhands wrote:
Note to the casual reader: I don't believe Mossy's list was intended to be a recommendation to buy all 10 funds.


Actually it is. Buying all 10 funds lets you create a balanced domestic + international portfolio that overweights in small + value using the cheapest index/index-like option in each class that's available via Schwab NTFs. The high minimums though mean you need about 100K to create this portfolio. So for someone just starting out, do one fund at a time until you accumulate all 10 funds.


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PostPosted: Mon Jun 25, 2007 2:38 pm 
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Location: Houston, TX
MossySF wrote:
Actually it is.

I stand corrected.
I don't happen to believe that a portfolio of small/value funds is appropriate for all investors though.

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PostPosted: Mon Jun 25, 2007 6:29 pm 

Joined: Sat Apr 07, 2007 2:03 am
Posts: 872
Location: Taishan, Guangdong, China
tinyhands wrote:
MossySF wrote:
Actually it is.

I stand corrected.
I don't happen to believe that a portfolio of small/value funds is appropriate for all investors though.


The above is not a portfolio of only small/value -- it covers all the categories but has a small/value tilt. The reasoning is when you buy into a index that's based on market cap, you implicitly end up with more large and more growth because the mega corps dominate a huge amount of the stock market indexes. For example, the 10 top companies in the US is about 20% of the total stock market if you buy in using market cap. To me, it seems undiversified that 10 companies out of thousands can dominate performance so heavily. So the school of thought here to so augment your core Total Stock Market holding with extra value funds and extra small funds to balance out the market cap buy-in dilemna and decrease the impact of the top X largest companies.

If you don't subscribe to this idea, then the portfolio is certainly simpler -- roughly so:

45% Schwab 1000 (SNXFX) - LB
45% Schwab International Index (SWINX) - INTL LB
10% American Century Emerg. Mrkt (TWMIX) - EMERG

There are no small caps here because a market-weighted portfolio would look something like:

40% Schwab 1000 (SNXFX) - LB
5% Schwab Small Cap Index (SWSMX) - SB
40% Schwab International Index (SWINX) - INTL LB
5% Lazard Int'l Small Cap Open (LZSMX) - INTL SB
10% American Century Emerg. Mrkt (TWMIX) - EMERG

Adding the 2 5%s based on overall market ratios is nearly pointless due the small impact they would have on portfolio performance. In order to make small worthwhile to invest in, you have to tilt to small.


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PostPosted: Mon Jun 25, 2007 8:18 pm 
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Location: Houston, TX
Nuts, I didn't mean to say that it was composed of small/value funds- my bad. I don't like the value-tilt but, more importantly, I don't like a portfolio of actively managed mutual funds.

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PostPosted: Mon Jun 25, 2007 8:36 pm 

Joined: Sat Jun 09, 2007 12:45 pm
Posts: 45
Are all of the funds mentioned above geared towards short-term or long-term investments? In other words, how long would you keep the above? I was looking at the following:

SWDIX--Schwab Dividend Equity Fund - Investor Shares
SWBGX--Schwab MarketTrack Balanced Portfolio
SWCGX--Schwab MarketTrack Conservative Portfolio
SWHGX--Schwab MarketTrack Growth Portfolio
SWEGX--Schwab MarketTrack All Equity Portfolio
SNXFX--Schwab 1000 Index Fund - Investor Shares

I don't plan on starting out with all 6 of the above, but I am looking at choosing 1 to start with. I am leaning towards SWBGX (Market Track Balanced Portfolio), SNXFX (Schwab 1000 Index Fund), or SWHGX (Schwab MarketTrack Growth Portfolio). Of the three just mentioned, does anyone have any feedback or suggestions?



Korey


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PostPosted: Mon Jun 25, 2007 9:05 pm 

Joined: Sat Apr 07, 2007 2:03 am
Posts: 872
Location: Taishan, Guangdong, China
tinyhands wrote:
Nuts, I didn't mean to say that it was composed of small/value funds- my bad. I don't like the value-tilt but, more importantly, I don't like a portfolio of actively managed mutual funds.


Shrug... You make do with the funds you have available. The Schwab index funds are all 0.50% ER and above. That's about the same ER level as most of the actively-managed funds on the list. Or you pay $49.95 everytime you make a contribution to Vanguard via Schwab. At that cost, every purchase has to be more than 17K to beat 0.50% ER.

Of course, the real choice is answer is don't invest via Schwab. While it sounds nice to have checking and investments under one login, there's really little value to it. For a long-term buy-and-hold investor, 3 days to transfer from Schwab to Vanguard makes no difference.


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