Charles Schwab
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Schwab is one of the world’s largest discount brokerages with a history dating back to 1971. The brokerage has continuously grown over the decades, acquiring TD Ameritrade in 2020 with full client integration earlier this year.
Today, Schwabb has almost $9 trillion in client assets and acts as a full service broker. Schwab offers a solid collection of investor products and services, operating as a discount broker with commission free trading of stocks and ETFs.
Schwab has mass appeal with its customers ranging from complete newbies to sophisticated and experienced traders, with a mix of tools to cater to the different skill and experience levels.
Is my money safe with Schwab?
Yes, Schwab is a member of SIPC, protecting up to $500,000 of your securities, including $250,000 for cash. They also have additional insurance coverage and robust security measures.
What types of accounts does Schwab offer?
Schwab offers various accounts, including individual and joint brokerage accounts, IRAs, 401(k) rollovers, custodial accounts, and more specialized accounts like margin trading and options.
Can I get financial advice from Schwab?
Yes. Schwab provides access to financial consultants and, with Schwab Intelligent Portfolios Premium, you can work with Certified Financial Planners for a one-time setup fee and a monthly subscription.
How does Schwab handle tax-loss harvesting?
Schwab Intelligent Portfolios includes tax-loss harvesting, which helps offset your taxable gains by selling investments at a loss. Tax-loss harvesting is available for taxable portfolios with a minimum of $50,000, and there are no extra fees for enabling this feature in your account.
How much does options trading cost at Schwab?
Options trading at Schwab costs $0.65 per contract with no base commission for online trades. Using automated phone or assisted trading adds an extra service charge.
What customer support does Schwab offer?
Schwab offers 24/7 customer support by phone, live chat, and in-person at local branches. They also have a robust online support center for quick answers.
Are there fees for mutual fund trades?
Schwab offers thousands of mutual funds with no transaction fees through their Schwab Mutual Fund OneSource. For other funds, they charge up to $49.95 per trade if not done online.
Does Schwab charge for wire transfers?
Schwab does charge for outgoing wire transfers ($25 for domestic and $15 for international), but incoming wire transfers are free.
Pros | Cons |
|---|---|
Investment & Banking Options | Fees |
Thinkorswim Trading App | Limited International Market Access |
Fractional Shares, Paper Trading | No Cryptocurrency Trading |
Robo Advisor | High Minimum for Auto Investing |
Deep Research & Reporting | No IPO Access |
Schwab Features I Mostly Liked
Here are the key features that I found most appealing in Schwab:
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Think or Swim
Think or Swim is Schwab’s award winning trading platform. It aims to offer deeper diving into the market and I liked the real time insights that could be tailored to match my preferred trading style.
The software is fully customizable and it is available in a desktop, web based or mobile interface.
This makes it easy to keep on top of my trading whether I’m at home in front of my desk or on the go.
In any of the formats, I can access the essential trading functionality with intuitive features and ability to trade in stocks, ETFs, futures, forex and options.
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Intelligent Portfolios
The Intelligent Portfolio is Schwab’s robo advisor allowing me to access automated investing for a completely hands off approach.
With 80+ different variations, Schwab robo advisor builds and monitors the portfolio, automatically rebalancing to align with my goals. There are no commission or advisory fees, but I can still access live support 24/7.
The Intelligent Portfolios are created using low cost ETFs, but my portfolio was created based on the answers to a few questions.
I needed to complete a short questionnaire, and Schwab used this information to establish my goals, timeline and risk tolerance, and create a diversified portfolio.
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Stock Slices
Schwab Slices are essentially fractional shares. While offering fractional shares is not a unique feature, I appreciate that I can access any of the companies in the S&P 500 with a minimum purchase of $5.
I can buy a single slice or up to 30 slices with the same commission free purchase model as with full shares.
Since many of the companies in the S&P 500 have a high stock price, Stock Slices make these companies more accessible even with a limited investment fund.
Once purchased Stock Slices are just like regular shares. They appear in my brokerage account and I can even earn dividends, at a proportional rate.
For example, if a $5 slice represents 1/20th of a regular share, I will earn 1/20th of the standard dividend.
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Personalized Indexing
Personalized Indexing offers a customizable, professionally managed, and tax-efficient equity portfolio designed to align with your investment goals and values.
You can select from four index-based strategies: large U.S. companies, small U.S. companies, ESG-focused, and international markets. The portfolio allows you to exclude specific stocks or industries for greater personalization.
Also, it incorporates tax optimization techniques, such as automatic tax-loss harvesting, to potentially enhance after-tax returns. The fee for this service is 0.35%-0.40%, based on your portfolio worth.
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Banking Options
There are occasions when I’m not ready to make an investment purchase, so it is nice when my investment platform offers me the opportunity to earn on my uninvested cash.
What I particularly appreciate is that Schwab has a number of options for my funds.
In addition to CDs and money market accounts, I can even earn interest on any uninvested cash I have in my brokerage account.
Schwab also has Bank Investor Checking, which is linked to my brokerage account. I can use this like a standard checking account for my everyday spending needs.
There are no monthly service fees and I won’t incur overdraft fees.
Additionally, if I use the associated debit card, there are unlimited ATM fee rebates for any cash withdrawals I make anywhere in the world, and there are no foreign transaction fees.
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Choice of IRAs
Although offering retirement accounts is not unusual with an investing platform, what I appreciated with Schwab is that there is more than simply traditional and Roth IRAs. Schwab also offers rollover, custodial, and inherited IRAs.
There are also options for small businesses with Simple and SEP IRAs that offer products for different sized businesses with the possibility of plan customization.
There was no minimum investment requirement for my IRA and $0 online listed equity trade commissions.
The Schwab platform also includes a number of retirement resources and tools including planning calculators to help me to manage my long term financial future.
Additional Features That Helped Me
Besides the main features I use regularly, there are additional features for investors:
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Schwab Starter Kit
Another feature I really liked was the Schwab Starter Kit. Essentially, this is a welcome bonus for new customers, but Schwab has taken it up a notch.
The Starter Kit also provided $101 split equally across the top five S&P 500 stocks, which was a nice boost to my investment fund.
The Starter Kit consisted of educational resources and tools, including short videos and guides to understand investing 101.
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Personal Choice Retirement Account
Personal Choice is a self directed retirement brokerage account. It is part of an employer sponsored retirement plan, but it allows a wider range of investments.
Retirement plan providers need to offer PCRAs as part of the retirement plan to be able to open an account.
The employer will also determine if the investment selection includes most available investments or only mutual funds.
However, I could determine how much money to transfer from my retirement plan to the PCRA. I can then invest my assets into any investment type allowed by my plan.
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Paper Money
Essentially, Paper Money allows me to practice my trading strategies using real time market data without putting a single cent of real money at risk.
Paper Trading allows $100,000 of virtual buying power and I can use these virtual funds to refine my trading strategies.
What I liked about Paper Money is that I can still access all the products, features and tools that I can access during live trading.
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Comprehensive Research Tools
One area where many platforms fall short is research, which means that I often have to rely on third party research platforms. However, Schwab offers fairly comprehensive research tools with fact based insights from the Schwab team.
As you can see in these screenshots, there are hundreds of technical indicators, drawing tools and studies that help to visualize the potential risks.
What I found particularly helpful is the built in insights which includes expert commentary and live streaming news.
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Low Cost Mutual Funds
As you would expect with a well established brokerage firm, Schwab offers a wide selection of mutual funds.
Schwab allows me to choose from a variety of mutual funds across all asset classes and there are funds aligned to my specific preferences and many have no transaction fees.
As you can see in this screenshot, I can quickly find mutual funds of interest to me using the screener.
All the Schwab Asset Management funds have no transaction and load fees. There are also asset weighted operating expense ratios that work out to below the industry average.
As a Schwab client, I can also access T Rowe Price mutual funds, which aim to maximize the value of fund portfolios over a longer time horizon.
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Decent Reporting
In addition to the research tools, Schwab offers a decent selection of reports that can help me spot opportunities and determine the best purchases for my investing strategies.
From pulling up a report on the six biggest movers, as you can see in the screenshot below to gain and loss reporting, I can quickly pull up the information I need to decide whether now is the right time to buy or sell.
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Real Time Alerts
I don’t necessarily want to be tied to my desktop or mobile device, so it is nice that I can rely on real time alerts to let me know if positions have changed while I’m distracted.
It is easy to set up custom alerts as you can see in this screenshot, allowing me to enable push notifications, so I’ll receive an SMS if I need to take action.
I found it helpful that I could rely on receiving a notification if an asset price changes within a target price bracket.
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Investing Themes
Another feature I found helpful was the Schwab Investing Themes. If I’m struggling for inspiration for my next purchase, I can browse more than 40 themes that were built using Schwab’s proprietary research.
There is a wide variety of themes from Renewable Energy to AI, Schwab has identified trends and collating them into relevant groups.
Each theme has up to 25 individual stocks and I can customize according to my strategy or purchase as is. I liked that I could adjust the exposure for each stock with just a couple of clicks.
Periodically Schwab reviews and updates the themes to ensure that they continue to align with the latest research.
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Self Directed Fees
- Schwab offers commission-free online trading for stocks and ETFs, with a $25 fee for assisted trading and a $5 fee for automated phone trades.
- Options trading has no base commission but costs $0.65 per contract, plus the $5 or $25 service fee if using phone or assisted services.
- Schwab charges a transaction fee for some mutual funds, though many funds, including Schwab Funds, are free online.
- Futures and options cost $1.50 per contract. Bond trades are free online, but other fixed-income products have a $1/bond fee
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Robo Advisor Fees
Schwab Intelligent Portfolio – 0%, Schwab Intelligent Portfolios Premium – One-time planning fee: $300 + Monthly advisory fee: $30, Schwab Wealth Advisory: up to 0.80%
Schwab Customer Service
Schwab always has someone available—its 24/7 customer service operation indicates that it takes this part of its business seriously. The quickest way to contact Schwab is via the Live Chat service, which is available seven days a week.
In addition, there is a phone number for each service or issue one might need assistance with. If you are in the United States and feel the need to talk to a representative in person, just visit one of the 300 branches, and your questions will be answered professionally.
What Can Be Improved
No platform is perfect, and there are a few areas where Schwab could make some improvements. These include:
- Inconsistent Product Selection: While Schwab does offer a decent selection of assets, this is not consistent across all the platforms. For example, if I use Think or Swim, I can’t access mutual funds, but on Schwab.com, there are mutual funds but no Forex. This means that you need to choose which platform you want to use carefully.
- No Direct Crypto Trading: Schwab does offer Crypto ETFs, mutual funds and stocks, but it is not possible to trade coins directly. This does make it a little complicated if you want to dip your toes into crypto trading.
- High Minimum for Auto Investing: While the Intelligent Portfolio is a nice feature, you do need a minimum of $5,000 to open an account. There are no advisory fees or commissions unless you upgrade to Intelligent Portfolio Premium, which has a minimum requirement of $25,000 and there is a one time planning fee and a monthly advisory fee.
What Type of Investor is Best Suited to Schwab?
With a variety of platforms and products, Schwab has the flexibility to work for anyone, but there are a few types of investors who are likely to get the most from this firm.
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Active Traders Who Need Sophisticated Data
Schwab provides robust trading tools, real-time market data, and research reports, making it suitable for active traders looking for comprehensive market access and analysis tools.
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Retirement Investors
Schwab offers a choice of retirement investing accounts, so if a traditional IRA would not fit your circumstances, you won’t need to look elsewhere.
There are even small business retirement plans, making it easier to find the best option for your specific circumstances.
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Hybrid Investors
Hybrid investors may find Schwab a good fit due to its blend of automated and self directed investing.
Investors can leverage Schwab Intelligent Portfolios, a robo-advisor that creates diversified portfolios.
For a one-time planning fee and a monthly subscription, investors also gain access to unlimited guidance from a Certified Financial Planner (CFP).
How to Open a Brokerage Account?
Step 1:
Visit the Charles Schwab homepage and choose an account type between Brokerage, retirement and Automated & Managed Portfolios.
Take for instance, you choose “brokerage account”, choose the type you want, either individual or joint, and then click “Continue.”
Step 2:
Now, give your personal details i.e. your names, date of birth, and security number.
Step 3:
Next, give details of your contact; this includes your mobile phone number and email address, then click “Continue”.
