Schwab Intelligent Portfolios – Q1 2022 Update

About six months ago I posted my 5 year results using Schwab Intelligent Portfolio. The Schwab Intelligent Portfolio is their version of using a “RoboAdvisor” for investing a client’s money. After analyzing my results after five years, I found that the returns I got did not meet my expectations. Both the S&P 500 and Russel 2000 index funds have nearly doubled my returns. However, this does not mean that the RoboAdvisor did not work.

Before investing with the Schwab Intelligent Portfolio, I had to enter my goals for the account and my risk tolerance. After seeing my results, I adjusted both to be more aggressive to keep up with the market as a whole. It’s been about six months since updating those two key factors, here are my updated results.

What exactly is a Robo-advisor?

Before we dive into my updated results, let’s take a look at exactly what a robo-advisor is. Robo-advisors are basically algorithm-driven investment tools with the aim of having as little human oversight as possible. Essentially, this means there’s a computer that analyzes tons of more information a person could ever have and adjusts your portfolio accordingly.

With the Schwab Intelligent Portfolio, I don’t see trades being executed quickly in real time or even on a daily basis. Typically, my account is rebalanced every few months to ensure that the investments in the portfolio are on track to meet the goals I have set. Since my update of my goals, my account has been rebalanced twice.

Schwab Intelligent Portfolios Costs and Fees

One of the benefits of using the Schwab Intelligent Portfolio is that you don’t pay any additional fees. Currently, the only charges I incur are the expense ratios of the specific mutual funds my account is invested in.

I don’t have a premium account and I believe there is an extra cost involved, but you also get more services that come with it.

Schwab Intelligent Portfolio Performance

Let’s dive in again to see how my investment fared. Keep in mind that at the time of writing this February 14, the stock market has taken quite a nosedive, so the numbers didn’t look too bad until recently.


At this point, I’m essentially even about the past 6 months. As I mentioned the market has been rough lately, if I back this up for a month I see some improvement but still not much in the way of real gains.

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As with my last update, the real test is to re-compare my portfolio against the market as a whole, so far the results have been mixed. The S&P 500 (large-cap index) and Russell 2000 (small-cap index) wedged my results:

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Yes, the S&P 500 was positive at the very least, but barely. Let’s roll this back a month before the market took a hit.

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My results are again in the middle of the two indices. You could look at this and say that the S&P 500 has actually tripled my returns this time, which, while true, the actual difference in dollars is much smaller this time around. The market actually hit the 7% average while my investments and the Russell 2000 fell short.

Is there more to this?

Last time I stifled the difference in returns by setting modest goals and having a lower risk tolerance. I don’t think I have enough data to change my new settings at this point, so I’ll let them ride for at least another six months. To give you an idea of ​​my investment goals and risk tolerance, here’s a shot from my account:

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With my initial investment, target date and amount, my Intelligent Portfolio was only set at about 62% stocks, then cash and bonds, so in no way would I see the same returns as just investing in index funds. For my original goals, the Robo Advisor seemed to work.

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With my new targets and risk settings, the percentage of stocks increased to 73%, so the fact that I’m still below the S&P 500 shouldn’t; be so surprising. However, in my opinion, the goal of the robo-advisor is to beat the market. 8.2% in cash seems a bit high to me, but again, I’ll give these settings another half year before I tinker any further.

So should I use a Robo Adviser?

Since the Schwab Intelligent Portfolio is completely free, I do not regret using the account. At this point, it seems that for long-term investments, simply investing in low-cost index funds would be a better choice. Maybe the Intelligent Portfolios are not the way to beat the market, maybe they are. I still like the idea of ​​automatic rebalancing, but so far it doesn’t seem to matter much, at least to me.

Schwab Intelligent Portfolio – What’s Next For Me?

As I mentioned, I don’t yet have enough data on my updated goals to make adjustments. It seems more and more like I will have to raise my targets to be higher to keep up with the S&P 500. Remember I beat the Russell 2000 but since these are small cap stocks they tend to be more volatile and unsurprisingly their losses are bigger than mine. Here’s the result here, my profit is between popular index funds so it matters which one you invest in to tell whether you beat the market or not.

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Jeff Cooper

Jeff is a fan of all things finance. When he’s not changing the world with his blog, you can find him on a run, playing a Mets game, playing video games, or just playing with his kids.

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