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Retirement Investment Choices

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Call us at 888-213-4695 or visit your local branch.


Use this information to understand the retirement investment choices that are available to you—and identify which ones may work best for your goals and investing preferences.

Fixed Income Investments

Individual Bonds Individual bonds give you control over when and how you receive income but require more effort to research, choose, diversify, and monitor than some alternatives.
CDs If you can lock up your cash for a specific term, CDs allow you to earn a fixed or variable rate of return and receive FDIC insurance up to applicable limits.
Bond Mutual Funds and ETFs Bond mutual funds and ETFs make it convenient to diversify your holdings and benefit from professional management, but they do not offer fixed income or maturity payments and you may have to sell at a loss to get your principal.
Managed Accounts You may want to consider professionally managed short-term, intermediate, and long-term fixed income strategies, as well as PIMCO Municipal Bond Ladder strategies.

What you can do now:

  • Refer to our asset allocation models as you plan your retirement portfolio allocation strategy.
  • Get more details about the benefits of bond ladders by watching our video, “Should bond ladders be part of your plan?”

Compare Fixed Income Investments

  Typical Investment Minimums Income Payments Return of Principal Risks Involvement Required
Bonds

Individual bonds:

Bonds typically pay a predefined schedule of fixed interest payments, and promise to return your money on a specific maturity date (provided the issuer does not default).

Reasons to consider:

  • You have the time and investment knowledge required to research and select which bonds to buy, monitor your portfolio for credit quality changes, watch for called or maturing bonds, and reinvest proceeds when principal is returned.
  • You'd like a predefined schedule of interest payments.
  • You can leave your money invested until maturity, or when called.
  • You have enough money to diversify. When you purchase individual corporate or municipal bonds, Schwab recommends that you have at least $50,000 to invest across a minimum of 10 issuers for adequate diversification by issuer and maturity.
Close

Typically $1,000 or higher based on bond type or issuer

Defined payment schedule

At maturity or when called (provided the issuer does not default).

Credit risk

Credit risk:

Credit risk is the risk that a security will default or that its credit rating will be downgraded, resulting in a decrease in value for the security. The measurement of credit risk usually considers the risk of default, credit downgrade, or change in credit spread. Bonds are rated for their creditworthiness by ratings agencies that evaluate a bond issuer's financial health.

Consider if:

  • Bonds with ratings of AAA to BBB (Standard & Poor's) and Aaa to Baa (Moody's) are considered investment-grade.
  • Ratings below BBB are considered speculative (also known as "sub-investment grade," "high-yield," or "junk" bonds).
  • If you have a low risk tolerance, it is advisable that you stick to issues with investment-grade ratings.
Close
Interest rate risk

Interest rate risk:

Interest rate risk is the risk that the value of a fixed income security will fall as a result of a change in interest rates. This risk can be reduced by diversifying the maturities of individual fixed income securities, investing in mutual funds or ETFs that diversify maturities, or investing in floating-rate securities.

Close
Inflation risk

Inflation risk:

Inflation risk is the risk that inflation will erode the real return on investment. This occurs when prices rise at a higher rate than investment returns and, as a result, money buys less in the future. The risk is greatest if you’re investing over long periods of time. Inflation-protected securities can be used to mitigate inflation risk.

Close
General bond risks

General bond risks:

The following risks are common to individual bonds and to mutual funds and ETFs containing bonds.

Interest rate risk:

The risk that the value of a fixed income security will fall as a result of a change in interest rates. This risk can be reduced by diversifying the maturities of individual fixed income securities, investing in mutual funds or ETFs that diversify maturities, or investing in floating-rate securities.

Credit risk:

The risk that a security will default or that its credit rating will be downgraded, resulting in a decrease in value for the security. The measurement of credit risk usually considers the risk of default, credit downgrade, or change in credit spread.

Call risk:

The risk to the security holder that the call option will be exercised by the issuer at an unfavorable time for the holder, such as when interest rates are low; if you are a bondholder whose security is called, you can lose potential interest income.

Liquidity risk:

The relative ability of a security to be sold without substantial transaction costs or reduction in value. The harder it is to sell a security or the greater the loss in value resulting from a sale, the greater the liquidity risk.

Reinvestment risk:

The risk that a bond matures or is called when interest rates are lower, leaving the investor with lower-yielding reinvestment options and possible reduction in cash flow. To mitigate reinvestment risk, an investor can purchase non-callable bonds, which are not subject to early redemption, and/or ladder bond maturities at different intervals over time.

Inflation risk (purchasing power risk):

The risk that inflation will erode the real return on investment. This occurs when prices rise at a higher rate than investment returns and, as a result, money buys less in the future. The risk is greatest if you’re investing over long periods of time. Inflation-protected securities can be used to mitigate inflation risk.

Market and event risk:

The risk that a change in the overall market environment or a specific occurrence such as a political incident will have a negative impact on the price/value of your investment.

Close

Involvement required for selection and management.

More

Involvement required:

You research and select which bonds to buy, monitor your portfolio for changes in credit quality or risk, watch for called or maturing bonds, and reinvest proceeds when principal is returned.

Close
CDs

Certificates of deposit:

If you're looking for an FDIC-insured investment with a fixed rate of return for a specific period of time, consider a certificate of deposit.

Reasons to consider:

  • Your investment is insured by the FDIC—$250K per depositor per institution.
  • You can rely on a fixed rate of return for a specific period of time.
  • By selecting CDs with staggered maturities (laddering), you can maintain relatively stable interest income in a fluctuating interest rate market.
Close

Typically $1,000

Defined payment schedule

At maturity or when called.

Inflation risk

Inflation risk:

Inflation risk is the risk that inflation will erode the real return on investment. This occurs when prices rise at a higher rate than investment returns and, as a result, money buys less in the future. The risk is greatest if you’re investing over long periods of time. Inflation-protected securities can be used to mitigate inflation risk.

Close
Liquidity risk

Liquidity risk:

Liquidity risk is the relative ability of a security to be sold without substantial transaction costs or reduction in value. The harder it is to sell a security or the greater the loss in value resulting from a sale, the greater the liquidity risk.

CDs have liquidity risk because they generally charge a penalty if funds are withdrawn prior to maturity, and they may be difficult to sell in the secondary market.

Close
Interest rate risk

Interest rate risk:

Interest rate risk is the risk that the value of a fixed income security will fall as a result of a change in interest rates. This risk can be reduced by diversifying the maturities of individual fixed income securities, investing in mutual funds or ETFs that diversify maturities, or investing in floating-rate securities.

Close

Involvement required for selection. Management can be limited.

More

Investing in CDs:

You select CDs with the rates and maturity dates you prefer, watch for maturing CDs, and decide how to reinvest the proceeds when principal is returned.

Close
Bond Mutual Funds

Bond mutual funds:

Bond mutual funds are a convenient way to own a diversified fixed income portfolio without the work of selecting and managing individual bonds.

Reasons to consider:

  • You seek professional management, diversification, and risk management of your bond holdings.
  • You want to automatically reinvest interest.
  • You can tolerate fluctuations in income and investment value.
Close

$100–$2,500 depending on the fund

Income fluctuates

No maturity—can be sold daily after market close.

Credit risk

Credit risk:

Credit risk is the risk that a security will default or that its credit rating will be downgraded, resulting in a decrease in value for the security. The measurement of credit risk usually considers the risk of default, credit downgrade, or change in credit spread. Bonds are rated for their creditworthiness by ratings agencies that evaluate a bond issuer's financial health.

Consider if:

  • Bonds with ratings of AAA to BBB (Standard & Poor's) and Aaa to Baa (Moody's) are considered investment-grade.
  • Ratings below BBB are considered speculative (also known as "sub-investment grade," "high-yield," or "junk" bonds).
  • If you have a low risk tolerance, it is advisable that you stick to issues with investment-grade ratings.
Close
Interest rate risk

Interest rate risk:

Interest rate risk is the risk that the value of a fixed income security will fall as a result of a change in interest rates. This risk can be reduced by diversifying the maturities of individual fixed income securities, investing in mutual funds or ETFs that diversify maturities, or investing in floating-rate securities.

Close
Inflation risk

Inflation risk:

Inflation risk is the risk that inflation will erode the real return on investment. This occurs when prices rise at a higher rate than investment returns and, as a result, money buys less in the future. The risk is greatest if you’re investing over long periods of time. Inflation-protected securities can be used to mitigate inflation risk.

Close
General bond risks

General bond risks:

The following risks are common to individual bonds and to mutual funds and ETFs containing bonds.

Interest rate risk:

The risk that the value of a fixed income security will fall as a result of a change in interest rates. This risk can be reduced by diversifying the maturities of individual fixed income securities, investing in mutual funds or ETFs that diversify maturities, or investing in floating-rate securities.

Credit risk:

The risk that a security will default or that its credit rating will be downgraded, resulting in a decrease in value for the security. The measurement of credit risk usually considers the risk of default, credit downgrade, or change in credit spread.

Call risk:

The risk to the security holder that the call option will be exercised by the issuer at an unfavorable time for the holder, such as when interest rates are low; if you are a bondholder whose security is called, you can lose potential interest income.

Liquidity risk:

The relative ability of a security to be sold without substantial transaction costs or reduction in value. The harder it is to sell a security or the greater the loss in value resulting from a sale, the greater the liquidity risk.

Reinvestment risk:

The risk that a bond matures or is called when interest rates are lower, leaving the investor with lower-yielding reinvestment options and possible reduction in cash flow. To mitigate reinvestment risk, an investor can purchase non-callable bonds, which are not subject to early redemption, and/or ladder bond maturities at different intervals over time.

Inflation risk (purchasing power risk):

The risk that inflation will erode the real return on investment. This occurs when prices rise at a higher rate than investment returns and, as a result, money buys less in the future. The risk is greatest if you’re investing over long periods of time. Inflation-protected securities can be used to mitigate inflation risk.

Market and event risk:

The risk that a change in the overall market environment or a specific occurrence such as a political incident will have a negative impact on the price/value of your investment.

Close

Involvement required for selection. Management can be limited.

More

Investing in bond mutual funds and ETFs:

You select which funds to buy and monitor the fund’s performance. The bond fund manager selects which individual bonds to buy and sell in each fund and reinvests bond proceeds when principal is returned.

Close
Bond ETFs

Bond ETFs:

Bond ETFs are an efficient, cost-effective way to own a diversified fixed income portfolio without the work of selecting and managing individual bonds.

Reasons to consider:

  • You want to keep investing costs low—ETFs typically have low operating expense ratios.
  • You prefer to see exactly which securities your ETF owns—ETFs typically disclose their holdings on a daily basis.
  • You want the ability to buy and sell your ETF at any time during market hours.
Close

Price of one share

Income fluctuates

No maturity—can be sold anytime during market hours.

Interest rate risk

Interest rate risk:

Interest rate risk is the risk that the value of a fixed income security will fall as a result of a change in interest rates. This risk can be reduced by diversifying the maturities of individual fixed income securities, investing in mutual funds or ETFs that diversify maturities, or investing in floating-rate securities.

Close
Inflation risk

Inflation risk (purchasing power risk):

The risk that inflation will erode the real return on investment. This occurs when prices rise at a higher rate than investment returns and, as a result, money buys less in the future. The risk is greatest if you’re investing over long periods of time. Inflation-protected securities can be used to mitigate inflation risk.

Close
General bond risks

General bond risk:

The following risks are common to individual bonds and to mutual funds and ETFs containing bonds.

Interest rate risk:

The risk that the value of a fixed income security will fall as a result of a change in interest rates. This risk can be reduced by diversifying the maturities of individual fixed income securities, investing in mutual funds or ETFs that diversify maturities, or investing in floating-rate securities.

Credit risk:

The risk that a security will default or that its credit rating will be downgraded, resulting in a decrease in value for the security. The measurement of credit risk usually considers the risk of default, credit downgrade, or change in credit spread.

Call risk:

The risk to the security holder that the call option will be exercised by the issuer at an unfavorable time for the holder, such as when interest rates are low; if you are a bondholder whose security is called, you can lose potential interest income.

Liquidity risk:

The relative ability of a security to be sold without substantial transaction costs or reduction in value. The harder it is to sell a security or the greater the loss in value resulting from a sale, the greater the liquidity risk.

Reinvestment risk:

The risk that a bond matures or is called when interest rates are lower, leaving the investor with lower-yielding reinvestment options and possible reduction in cash flow. To mitigate reinvestment risk, an investor can purchase non-callable bonds, which are not subject to early redemption, and/or ladder bond maturities at different intervals over time.

Inflation risk (purchasing power risk):

The risk that inflation will erode the real return on investment. This occurs when prices rise at a higher rate than investment returns and, as a result, money buys less in the future. The risk is greatest if you’re investing over long periods of time. Inflation-protected securities can be used to mitigate inflation risk.

Market and event risk:

The risk that a change in the overall market environment or a specific occurrence such as a political incident will have a negative impact on the price/value of your investment.

Close

Involvement required for selection. Management can be limited.

More

Investing in bond mutual funds and ETFs:

You select which funds to buy and monitor the fund’s performance. The bond fund manager selects which individual bonds to buy and sell in each fund and reinvests bond proceeds when principal is returned.

Close

Investors should carefully consider information contained in the prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing.

Compare Managed Accounts

  Description Investment Minimum Management Fee
Managed Accounts – Fixed Income

Managed accounts – fixed income:

Benefit from the experience of some of the country's leading asset managers, who have expertise in fixed income investing.

Reasons to consider:

  • You want professional assistance with selecting and setting up your portfolio.
  • You want direct ownership of the underlying bonds.
  • You prefer to leave the work of managing a bond portfolio to professionals.
Close

With a managed account, you benefit from the expertise of a professional asset management firm that invests and manages your portfolio based on your goals. Managed accounts should be considered as a component of a larger, more diversified portfolio.

Learn more.

$250,000

Starting at 0.65%1

PIMCO Muni Bond Ladder Strategies

PIMCO Muni Bond Ladder strategies:

Get the income-generating benefits of a bond ladder without the time-consuming process of selecting the right bonds, monitoring risk and maturity dates, and reinvesting proceeds.

Reasons to consider:

  • You need periodic, tax-efficient income from your taxable accounts.
  • You want direct ownership of the underlying bonds.
  • You prefer to leave the work of researching, assembling, and managing a bond ladder to professionals.
Close

PIMCO Municipal Bond Ladder Separately Managed strategies help you get the benefits of a bond ladder along with a money manager’s research capabilities and expertise in assembling and managing your ladder.

Learn more.

$300,000 (for distributed income);

$250,000 (for reinvested income)

Starting at 0.35%2



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