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Contrary to popular belief, investing in index funds and exchange-traded funds (ETFs) are not only for people with a lot of cash to risk. Investing in such is also an option for individuals thinking of diversifying their retirement portfolios.
One institution you can trust when diversifying your retirement funds through investing is the Charles Schwab Corporation. The company offers different types of investment services and products that expose investors to American and international stocks, bonds, and real estate.
Learn in this article of the ETFs offered by this investment advisor is right for you.
Charles Schwab: What Is It and How It Works
To start investing through Charles Schwab is easy. Once you have visited their website, you have to select an account type you want, open and start an account, fund it, research the best investment vehicle for you, and then set and strategy and maintenance plan.
They are popular among beginning investors (even those with a fixed income) because their platforms have no minimum investment fund and no transaction fees. Also, they provide an above-average service in their mobile application. Users can choose from a wide selection of index funds. And, last but not least, they have commission-free stock, options, and ETF trades.
7 Best Schwab Funds for Retirement
Now that you have learned the pros and cons of investing in Charles Schwab, here are 7 of the best index funds they offer right for those with a retirement account. Note that each type of fund bears its own strengths and weaknesses. Please read the details of each type of investment, so you can have an understanding of the type of return you can expect.
1. Schwab Fundamental US Large Company Index Fund (SFLNX)
This fund is an investment to large-cap companies in the U.S., including AT&T and JPMorgan Chase & Co. This fund invests in stocks of companies included in the Russell RAFI US Large Company Index. In terms of its performance in the previous years, it has a 4.88% return over the past three years and has a 10.57% return over the past decade.
One good thing about SFLNX is that its fees are lower than other funds found in the same category. The initial fees for this fund are often paid to brokers as a commission. But, the downside is that its risk is above average than the funds in the same category.
2. Schwab Fundamental International Large Company Index Fund (SFNNX)
This fund invests in stocks included in the Russell RAFI Developed ex US Large Company Index. In contrast to the domestic-centric approach of the SFLNX, this fund is for large-cap companies based in countries like Japan, the United Kingdom, South Korea, and many more. Companies include Samsung Electronics Co., Toyota Motor Corp., Nestle, etc.
Admittedly, SFNNX has not performed well compared to other funds. It has a return of -4.62% in the past three years and only 2.42% in the past decade. Despite its poor performance, investors choose this fund because it has low fees compared to other funds in the same category. Also, its risk is considered average. Hence, it is a good option for investors with little to no experience and those who do not want to face major risks.
3. Schwab S&P 500 Index (SWPPX)
The funds for this are invested in the 500 largest companies in the United States that belong to the S&P 500 Index. It covers around 80% of the investable market capitalization in the U.S. equity market. It has performed well in the past years. For example, it has a 10.39% return in the past three years and has a 12.93% return in the past decade.
4. Schwab Health Care Fund (SWHFX)
This fund is an investment to companies belonging to the health care industry like Johnson & Johnson, Pfizer, Merck & Co., and many more. Its investment tries to look for long-term capital growth. This fund is focused on investments in the health care sector, including pharmaceutical companies, biotechnology companies, health care, medical facilities, providers and suppliers of medical products, and many more. Notably, it has performed well in the past years such that it has a return of 8.39% in the last three years and a 13.79% return in the last ten years.
5. Schwab Total Stock Market Index Fund (SWTSX)
Meanwhile, this fund is an investment in the total stock market funds, including all of the stocks being traded on United States exchanges. Some of these companies belong to industries like electronic services. One reason why an investment adviser would recommend this is its good performance in the past years. The last three years have a return of 9.91% while it has a 12.72% return in the last decade.
6. Schwab 1000 Index Fund (SNXFX)
This fund is an investment to the top 1,000 stocks in the market. The measure is based on the market capitalization of companies. This fund’s largest asset allocation goes to the largest holdings, like Facebook, Microsoft, Amazon, Apple, and more. It is a passively managed fund, which means that the fund manager only follows the index and does not decide where to invest.
7. Schwab Balanced Fund (SWOBX)
This fund combines equity and bond funds. It includes other funds from Schwab, such as WAGX, WANX, and LGILX. Its expense ratio is 0.5%. This index fund also invests in various investment groups affiliated to the Charles Schwab Co Inc and the Laudus Funds. Around half of its investments are in equity securities and the other half are in fixed income securities.
This fund has fairly performed well in the past years. For one, it has a 7.16% return in the last three years while it has an 8.51% return in the last 10 years. According to Morningstar, investors are advised to read all the information related to this fund because it has an above-average risk.
Schwab offers multiple options for retirement fund holders who want to invest and eventually grow their money through mutual funds or within their vast range of stocks and bonds offering. If you wish to invest in any of the ETFs mentioned above, it is important to examine the details, including the expense ratio, the domestic stock market, the international market. If you wish to make a stock profit in the long term, you must best on the right type of ETFs.
Note that this article only covered seven of the various ETFs of Schwab. The corporation provides a full list of investment options and solutions. These include Schwab target funds or Schwab target-date funds, Schwab intelligent portfolios, and many more. Needless to say, there are plenty of things to cover when it comes to Charles Schwab Corporation.
Lastly, if you want to read more information about improving and diversifying your retirement portfolio, Investoralist has a lot of materials made for you. Aside from discussing what Charles Schwab Corporation provides to its clients, we also give you an idea of what the other investment advisors are offering. Aside from investments, we have a wide range of materials to help you understand financial topics like bonds, assets, brokerage accounts, stocks, expense ratios, and many more.