Schwab Allocation

[KittyFooFoo]

Hi. I'm about to initially fund a Schwab taxable brokerage account (my brokerage options are restricted due to my employer; I can't invest with vanguard).

Our situation: late 20s/early 30s. High income, high student loan debt, prefer to invest spare cash due to non-insane interest rate + refinance options on student debt. Retirement plans are maxed.

I am initially funding this account with $15k, and am shooting for $4k monthly contributions. My question is how to allocate the money--I am a big investing n00b, but an eager learner.

I was leaning toward:
75%  Schwab Total Stock Market Index Fund (SWTSX)
12.5%. Schwab International Index (SWISX)
12.5%. Schwab Fundamental US Small Company Index (SFSNX)

where the point of the bottom 25% is diversification, which is, like, a thing in investing from what I hear.

Is this a reasonable choice?  What would you do differently, and importantly, why?

[GGNoob]

First question since you are opening a taxable account...have you maxed out your Backdoor Roth IRA for yourself (and your spouse)?

I like the ETFs at Schwab. They have the lowest expense ratios in the industry. The bid/ask spread might be higher than what Vanguard ETFs have, but if you are holding for long term, that won't matter.

Personally, I'd go with at least a 30% international allocation. Assuming a tilt to US small-cap stocks, I'd do something like this:

60% SCHB (Total US Stock)
10% SCHA (US Small Cap)
20% SCHF (Developed International)
10% SCHE (Emerging Markets)

Remember though, that you should look at your entire portfolio as a whole. So if you have a 401k, you would take those funds into consideration when allocating your taxable account. You want to invest in the lowest cost funds in the most tax efficient account for those funds.

[RapmasterD]

I also don't understand your employer restrictions for investing in a taxable brokerage account, unless your employer happens to be Schwab, in which case I'd post your query to the dude in the next cubie. "Hey bud, WTF? Where should I put my Lincolns, dude bro?" And you can now see why I'm currently not employed.......

A self-directed brokerage account that is part of a 401K I understand. My wife has one of those...at Schwab. Taxable I do not get.

[KittyFooFoo]

I work for a finance company. Lots of restrictions on what I can trade and with whom.

[innerscorecard]

I think Schwab's funds are quite good. What I would keep in mind is this:

1. Schwab allocates countries in international funds and emerging market funds in quite a different way than why Vanguard does. (I'll use the ETF tickers as that's what I'm familiar with) SCHF includes developed markets only, unlike VXUS, which also has an emerging markets component. So there isn't overlap between SCHE and SCHF. Also, Schwab counts Korea as an emerging market. The same is true for FNDF and FNDE.

2. The fundamental ETFs are a little thinly traded - there's sometimes a significant bid-ask spread there. You're going with the mutual fund format so that's not a big issue for you.