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Important Disclosures

This chart illustrates the growth in value of saving 10% of annual salary invested in increasingly conservative asset allocations as each saver ages. Each saver begins with a salary of $18,580 in 1976 that grows to $112,560 in 2015 based on a 3% annual increase and a 10% promotion every five years. The hypothetical savers begin at age 26 with the Schwab Aggressive Model Plan (50% large-cap stocks, 25% international stocks, 20% small-cap stocks, 5% cash), shift to the Moderately Aggressive Model (45% large-cap stocks, 20% international stocks, 15% small-cap stocks, 15% bonds, 5% cash) at age 39, and move to the Moderate Model at age 52 (35% large-cap stocks, 15% international stocks, 10% small-cap stocks, 35% bonds, 5% cash). The asset allocation plan performance is the weighted averages of the performances of the indexes used to represent each asset class in the plans, and the plans are rebalanced annually. Fees and expenses would lower returns. Using the same methodology, had a saver stayed invested over four decades in the S&P 500® Index instead of the Schwab models, he or she would have experienced greater volatility and would have had an ending wealth of $1.65 million.   

Past performance is no guarantee of future results. 

Indexes used for model asset allocation plans: U.S. large-cap stocks: S&P 500® Index. U.S. small-cap stocks: Russell 2000® Index; the CRSP 6-8 was used prior to 1979. International stocks: MSCI EAFE® Net of Taxes. Bonds: Barclays U.S. Aggregate Index; the Ibbotson Intermediate-Term Government Bond Index was used prior to 1976. Cash equivalents: Citigroup 3-Month U.S. Treasury Bill Index; the Ibbotson U.S. 30-day Treasury Bill Index was used prior to 1978.

The indexes are unmanaged, do not incur fees and expenses, and cannot be invested in directly.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors.

International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets.

Small-cap securities are subject to greater volatility than those in other asset categories.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

The Schwab Center for Financial Research is a division of Charles Schwab & Co.


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