The Many Ways to Buy Mutual Funds at Schwab
- Schwab offers multiple tools and services for buying mutual funds, ranging from fund screeners to comprehensive advice and guidance.
- While tools such as the Mutual Fund OneSource Select List offer assistance in identifying appropriate funds, other services provide a holistic view of mutual fund portfolio construction.
- Investors can get help in narrowing down potential funds for a specific asset class as well as determining appropriate weightings by asset class based on their risk tolerance.
At Schwab, we believe in offering clients flexibility to meet their unique needs. As such, we provide investors a number of ways in which they can invest in mutual funds. Self-directed investors, who generally prefer to do their own research and analysis to craft a portfolio of individually selected funds, can easily buy funds online or by phone. Others are looking for a bit more assistance or direction, either in constructing an appropriate asset allocation with mutual funds or in narrowing down and/or selecting specific funds for various categories. Still others seek a higher level of guidance in developing and maintaining a mutual fund portfolio as well as in growing and managing their wealth. In this article we provide an overview of them all, so that investors can determine which method would best meet their needs, desired level of involvement, and comfort level.
For Self-Directed Investors
Many Schwab investors maintain self-directed accounts, do their own research on potential investments, and make their fund purchases on a one-time or as-needed basis—either online or by phone. These investors often take advantage of the broad range of information, insights and tools—including the Mutual Fund OneSource Select List—available through Schwab to conduct their research and find funds that meet their criteria.
For self-directed investors
- By phone: 800-435-4000
Of course, investment portfolios aren't meant to be static. Investors seeking to keep their asset allocation aligned to their risk profile and investment horizon will want to rebalance regularly. Many are also likely to add to their investments over time, either on a regular basis or as their situation allows. At such times, they can utilize the information and tools Schwab provides to keep their portfolio on track.
Automating the Process
Schwab investors seeking to regularly add to their fund holdings can take advantage of the convenience of Schwab's Automatic Investment Plan (AIP). It allows investors to make subsequent investments in one or more funds—following an initial purchase—on a monthly, semi-monthly, or quarterly basis. In addition to convenience, AIP adds a level of discipline to an investment program.
By investing a fixed amount on a regular basis, regardless of market movements—a concept known as dollar-cost averaging—investors can dampen market volatility while potentially lowering their average share price over the long term. That's because when share prices are down, an investor's fixed dollar investment buys more shares than when share prices are higher.
AIP is available for Mutual Fund OneSource® funds, as well as certain other no-transaction-fee funds, with no loads and no transaction fees, and there's no cost to establish the plan. Be aware, of course, that periodic investment plans such as AIP won't ensure a profit or protect against loss in a declining market. AIP purchases can be funded via cash available in an account, direct deposit or through regular online transfers from another financial institution (MoneyLink).
To establish Schwab's Automatic Investment Plan
- By phone: 800-435-4000
Mutual Fund Portfolio Builder
Also designed for self-directed investors, Schwab Mutual Fund Portfolio Builder™ helps investors identify and select mutual funds that might be appropriate for them, simplifying the research and selection process. Investors select one of five risk profiles—Conservative, Moderately Conservative, Moderate, Moderately Aggressive or Aggressive—and are presented with a list of highly rated mutual funds for each profile, selected from the current Mutual Fund OneSource Select List.
To help investors identify an appropriate risk profile, asset allocations are shown for each of the five alternatives, along with time horizons and investment goals appropriate for each, average annual returns over the past 35 years, and each portfolio's best-year and worst-year return over that period. And if an investor feels uncomfortable selecting a profile, a risk profile questionnaire is offered to help.
The Mutual Fund Portfolio Builder was designed as an educational tool to help investors establish a one-time, diversified portfolio of mutual funds. Investors are responsible for all decisions made, as well as for ongoing portfolio monitoring of and rebalancing of fund allocations as needed and appropriate. The suggested minimums—$10,000 for retirement accounts and $12,500 for non-retirement accounts—are designed to ensure sufficient diversification, and there are no fees for the service. It's appropriate both for beginning investors who may feel overwhelmed by the many mutual fund choices available to them as well as for experienced investors who may not have sufficient time or interest to sort through potential portfolio choices.
To use Schwab's Mutual Fund Portfolio Builder
- By phone: 866-393-6185
Schwab Managed Portfolios
For investors looking to delegate mutual fund decisions, there's Schwab Managed Portfolios™—Mutual Funds, which provide professionally managed, broadly diversified portfolios of mutual funds. With minimums as low as $25,000, Schwab Managed Portfolios offer broad diversification, exposure to a wide range of asset classes, and ongoing investment monitoring and portfolio rebalancing by investment professionals at Charles Schwab Investment Advisory. Fees are competitive and are based on portfolio value, with rates diminishing on higher balances.
Based on principles of asset allocation and diversification to manage risk and help investors develop and maintain well-balanced portfolios, Schwab Managed Portfolios offer six asset allocation models: Conservative Income, Income with Growth, Balanced, Balanced with Growth, Growth, and Aggressive Growth; investors work with a Schwab investment professional to determine which may be right for them. By holding a different mix of mutual funds based on its strategy, each portfolio can incorporate exposure to as many as 10 different asset classes, as well as sub–asset classes such as commodities, REITs or different styles of bonds. If taxes are a concern, a tax-aware option is also available for each model. (Investors should consult their tax advisor before purchasing the tax-aware option.)
To learn more about Schwab Managed Portfolios
- By phone: 866-855-5689
Schwab Private Client
For investors who want help but also want to maintain control of their investing decisions, there's Schwab Private Client.™ It provides guidance, recommendations, and service to investors seeking to work with a team to build their wealth. With Schwab Private Client, investors work one-on-one with an investment advisor who is supported by a broad range of specialists on topics from income to options to broad financial or estate planning. Schwab's Portfolio Consultants provide ongoing advice that's finely tailored to an investor's particular situation, providing recommendations not only on mutual funds but other types of investments, where appropriate and desired.
Through quarterly reviews and more-frequent communication as desired, investors and their Portfolio Consultant track performance, consider recommended changes to the portfolio, and discuss concerns or issues of interest. It's a continuous process comprising analysis, planning, portfolio construction, refinement, and ongoing advice. Like Schwab Managed Portfolios, fees are asset-based.
To learn more about Schwab Private Client
- By phone: 866-645-4124
It's All About Your Comfort Level
You don't have to be on your own in investing in mutual funds at Schwab. You can choose your method based on your interest, time availability, or motivation. You can automate your mutual fund purchases or get additional assistance when you need it. As always, schwab.com offers a wealth of information—take some time to explore what's there. Schwab's goal is to make mutual fund investing available, accessible, and easy to help investors get and stay on track to reach their financial goals.