Fall 2018 - Charles Schwab

STRATEGI ES & I DEAS FOR T H E C HAR L ES SC H WA B COM MUNI T Y | FA L L 2018

THE CONVERSATION CONTINUES ON PAGE 26 ELSEWHERE IN THIS ISSUE: NEW RULES FOR 529s (PAGE 5), SUPERCHARGE YOUR RETIREMENT SAVINGS (PAGE 7), A CURE FOR INVESTOR INSOMNIA (PAGE 34)

Fall 2018

CONTENTS

5

18

26

34

DEPARTMENTS

2 SCHWAB ORIGINALS What to read, watch and follow.

3 CEO'S NOTE Earning--and keeping-- your trust. By Walt Bettinger

THE BOTTOM LINE 5 New rules for 529 plans.

6 What to do when a fund manager leaves.

7 Supercharging your retirement savings.

8 Foreign bonds vs. U.S. Treasuries.

9 A better benchmark.

PERSPECTIVES 13 Can low-volatility stocks tame

the new market turbulence? By Steven Greiner and Mahmoud Shammaa

15 Facebook and Netflix's new home. By Brad Sorensen

18 How the Tax Cuts and Jobs Act could affect your next donation. With Hayden Adams

20 THE BIG PICTURE A state-by-state guide to municipal bonds.

23 TRADING Five steps for simplifying your stock-picking routine. By Lee Bohl

11 ASK CARRIE Financial tips for parents-to-be. By Carrie Schwab-Pomerantz

38 SPOTLIGHT Digital wallets; a fuller view into your finances; fund-picking help.

44 ON YOUR SIDE Taking the long view. By Charles R. Schwab

ON THE COVER: ILLUSTRATION BY RUTU MODAN

FEATURES

26 Seven Questions About Social Security And the answers that may surprise you.

32 Behave Yourself Dan Heath, host of Choiceology's Season 1, on sidestepping some of today's biggest behavioral traps.

34 Volatility. Inflation. Rising Rates. How to beat back the three market forces most likely to give investors insomnia.

On Investing (ISSN 1523-5327) is published quarterly. This publication is mailed at Standard A postal rates. If you prefer not to receive On Investing, please call 888-484-5340. POSTMASTER: Send address changes to On Investing, Charles Schwab & Co., Inc., P.O. Box 982600, El Paso, TX 79998-2600. On Investing does not assume any liability resulting from actions taken based on the information included in this magazine. Mention of a company or security does not constitute endorsement. Some contributors to On Investing may have active positions in securities or companies discussed in this issue. NWS73442Q318-00

FALL 2018 | ON INVESTING | 1

SCHWAB ORIGINALS

Read

Watch

Older Americans lose an average of $36.5 billion a year to scams and financial

exploitation.1 Find tips for protecting yourself and your loved ones at seniors.

Schwab Live Daily delivers live-streaming market analysis, trading strategies

and interactive Q&As with Schwab specialists every week. View the lineup at livedaily.

Subscribe

Follow

Subscribe to charlesschwab for tutorials on basic investing concepts, timely

takes on the markets and more.

Fixed income International Investing Markets and economy Personal finance Research Trading

@kathyjones @jeffreykleintop @charlesschwab @lizannsonders @carrieschwab @schwabresearch @randyafrederick

1True Link Financial. (0818-8VXK)

Board of Advisors

Andy Gill Executive Vice President, Client Solutions

Joe Carberry Senior Vice President, Corporate Communications

Greg Gable Senior Vice President, Office of the Chairman

Helen Loh Senior Vice President, Digital, Product & Content Marketing

Mason Reed Senior Vice President, Brand & Corporate Marketing Services

Mark W. Riepe, CFA? Senior Vice President, Schwab Center for Financial Research

Leila Chism Vice President, Media

Tamar Dorsey Vice President, Brand Journalism

Chandra Stanley Vice President, Digital Marketing

2 | CHARLES SCHWAB | FALL 2018

Editorial Staff

Sara Smith Editor in Chief

Caitlan Osborn Associate Managing Editor

ILLUSTRATIONS BY AMRITA MARINO

CEO's NOTE

Doing Right by Our Clients

We work hard to earn--and keep--your trust.

W

hen I assumed the responsibilities of CEO of Charles Schwab

nearly a decade ago, we were in the

midst of the worst recession in modern

history, precipitated in large part by

a subprime mortgage crisis that

undermined investors' trust in the

financial-services industry. When

roughly 80% of major U.S. banks

applied for aid from the U.S. Treasury's historic $700 billion bailout program,1 even those of us who didn't seek relief knew we faced an uphill battle in earning back consumers' trust.

Client trust and satisfaction have always been top priorities for Schwab, born from our deep-seated belief that trust takes a lifetime to earn but can be lost in an instant. This year, we were ranked by J.D. Power as "Highest in Investor Satisfaction with Full Service Brokerage Firms" for the third year in a row.2 We also earned Highest in Group Retirement Satisfaction among Large Plan Providers in the 2018 J.D. Power Group Retirement Satisfaction Study.3

These coveted accolades are welcome recognition of another core belief: that investors deserve the best service at the best value, each and every day.

Sincerely,

Walt Bettinger President & CEO

1Maurna Desmond, "They Turned Down the TARP," , 01/23/2009. | 2Charles Schwab received the highest numerical score in the J.D. Power 2016?2018 U.S. Full Service Investor Satisfaction Study. 2018 study based on 4,419 total responses from 18 firms measuring opinions of investors who used full-service investment institutions, surveyed November?December 2017. | 3Charles Schwab earned the highest overall satisfaction score in the Large Plan segment of the 2018 J.D. Power Group Retirement Satisfaction Study. The 2018 study was based on 9,500 responses from group retirement plan members surveyed February?March 2018.

See page 42 for important information. u Your experiences may vary. Visit . (0818-8YMP)

FALL 2018 | ON INVESTING | 3

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