Financial Decoder

The Fed is hiking short-term interest rates to slow the economy. Now the bond market is starting to expect less inflation longer term, and so yields on Treasury bonds have declined from their peak. What should bond investors do?

In this episode, Mark Riepe speaks with Kathy Jones, Schwab's chief fixed income strategist. Kathy has analyzed global bond, foreign currency, and commodity markets extensively throughout her career as an investment analyst and strategist, working with both institutional and individual clients. Kathy makes regular broadcast appearances on CNBC, Yahoo Finance, Bloomberg TV, and many other networks and is often quoted by The Wall Street Journal, The New York Times, Financial Times, and Reuters.

Kathy and Mark discuss the reasons why investors typically hold bonds in a portfolio, how the yield curve tends to function, quantitative tightening, and many other topics related to bonds and the current interest-rate environment.

Follow Financial Decoder for free on Apple Podcasts or wherever you listen.

Financial Decoder is an original podcast from Charles Schwab. For more on the series, visit Schwab.com/FinancialDecoder. 

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

IMPORTANT DISCLOSURES

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

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

Investing involves risk including loss of principal.

Please note that this content was created as of the specific date indicated and reflects the author's views as of that date. It will be kept solely for historical purposes, and the author's opinions may change, without notice, in reaction to shifting economic, business, and other conditions.

Diversification does not eliminate the risk of investment losses.

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. Lower-rated securities are subject to greater credit risk, default risk, and liquidity risk.

Tax-exempt bonds are not necessarily suitable for all investors. Information related to a security's tax-exempt status (federal and in-state) is obtained from third parties, and Schwab does not guarantee its accuracy. Tax-exempt income may be subject to the alternative minimum tax. Capital appreciation from bond funds and discounted bonds may be subject to state or local taxes. Capital gains are not exempt from federal income tax.

Preferred securities are often callable, meaning the issuing company may redeem the security at a certain price after a certain date. Such call features may affect yield. Preferred securities generally have lower credit ratings and a lower claim to assets than the issuer's individual bonds. Like bonds, prices of preferred securities tend to move inversely with interest rates, so they are subject to increased loss of principal during periods of rising interest rates. Investment value will fluctuate, and preferred securities, when sold before maturity, may be worth more or less than original cost. Preferred securities are subject to various other risks including changes in interest rates and credit quality, default risks, market valuations, liquidity, prepayments, early redemption, deferral risk, corporate events, tax ramifications, and other factors.

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Balancing the trade-off between risk and return is one of the most fundamental decisions an investor makes. But it can be difficult to "know thyself" and truly understand your risk tolerance. Myriad psychological factors may cause you to behave differently than your stated risk profile when confronted with market volatility. And beyond weathering the ups and downs of the market, there are other types of risk that can impact the pursuit and achievement of your financial goals.   

In this episode, Mark is joined by Susan Hirshman, CFA®, CFP®, CDFA®—director of wealth management for Schwab Wealth Advisory. Susan shares her perspective on risk from her years working as an advisor to high-net-worth and ultra-high-net-worth investors. Susan and Mark discuss the difference between risk tolerance and risk capacity, how to determine your true risk tolerance, and how a wealth management plan can help you stay the course when your risk tolerance is tested.

Follow Financial Decoder for free on Apple Podcasts or wherever you listen.

Financial Decoder is an original podcast from Charles Schwab. For more on the series, visit Schwab.com/FinancialDecoder. 

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.  Supporting documentation for any claims or statistical information is available upon request.

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

Investing involves risk including loss of principal.

Please note that this content was created as of the specific date indicated and reflects the author’s views as of that date. It will be kept solely for historical purposes, and the author's opinions may change, without notice, in reaction to shifting economic, business, and other conditions.

Creating a will has several benefits. A will can help your loved ones carry out your wishes, it can protect your assets, and it can allow you to designate a guardian of your children. Inevitably, some people never get around to making a will, even though they intend to do it. This type of procrastination can be difficult to overcome. Procrastination isn't a bias per se, but it's a close cousin to present bias, which causes us to avoid doing work now because the future benefits seem microscopic when compared to the immediate costs of doing the work today.

In this episode, Mark talks with Nancy Murphy, a CERTIFIED FINANCIAL PLANNER™ professional and Schwab senior financial planner in Indianapolis who was previously a guest on the episode about senior and vulnerable investors. Mark and Nancy help demystify the process of making a will by explaining all the components, and they discuss the various legal documents that can make up an estate plan. They also discuss the benefits of having a trust and some common mistakes people make when it comes to naming beneficiaries. 

Follow Financial Decoder for free on Apple Podcasts or wherever you listen.

Financial Decoder is an original podcast from Charles Schwab. For more on the series, visit Schwab.com/FinancialDecoder. 

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

Investing involves risk including loss of principal.

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, or investment manager.

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

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Is it possible for your portfolio to reflect your beliefs? ESG could be one way to help. ESG is an umbrella term to describe investing strategies that emphasize environmental, social, or governance factors, in addition to traditional measures of risk and return. Within this umbrella framework are strategies like SRI, or socially responsible investing; values-based investing; sustainable investing; and impact investing.

In this episode, Mark talks with Malik Sievers, head of ESG strategy for Schwab Asset Management. They discuss how to personalize your portfolio, the average performance of ESG funds, and how ESG funds may help make a difference in the world.

Subscribe to Financial Decoder for free on Apple Podcasts or wherever you listen.

Financial Decoder is an original podcast from Charles Schwab. For more on the series, visit Schwab.com/FinancialDecoder.

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

Important Disclosures

Investors should consider carefully information contained in the prospectus or, if available, the summary prospectus, including investment objectives, risks, charges, and expenses. Please read it carefully before investing.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

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

Investing involves risk including loss of principal.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Environmental, social and governance (ESG) strategies implemented by mutual funds, exchange-traded funds (ETFs), and separately managed accounts are currently subject to inconsistent industry definitions and standards for the measurement and evaluation of ESG factors; therefore, such factors may differ significantly across strategies. As a result, it may be difficult to compare ESG investment products.  Further, some issuers may present their investment products as employing an ESG strategy, but may overstate or inconsistently apply ESG factors. An investment product’s ESG strategy may significantly influence its performance.  Because securities may be included or excluded based on ESG factors rather than other investment methodologies, the product’s performance may differ (either higher or lower) from the overall market or comparable products that do not have ESG strategies. Environmental (“E”) factors can include climate change, pollution, waste, and how an issuer protects and/or conserves natural resources. Social (“S”) factors can include how an issuer manages its relationships with individuals, such as its employees, shareholders, and customers as well as its community. Governance (“G”) factors can include how an issuer operates, such as its leadership composition, pay and incentive structures, internal controls, and the rights of equity and debt holders. Carefully review an investment product’s prospectus or disclosure brochure to learn more about how it incorporates ESG factors into its investment strategy.

Socially screened strategies that use screening exclude certain investments and therefore may not be able to take advantage of the same opportunities or market trends as strategies that do not use screens. There can be no assurance that the strategies will achieve their desired outcomes. Each investing strategy brings with it its own set of unique risks and benefits.

Active Semi‐transparent ETFs operate differently from other exchange‐traded funds (ETFs). Unlike other ETFs, an active semi‐transparent ETF does not publicly disclose its entire portfolio composition each business day, which may affect the price at which shares of the ETF trade in the secondary market. There is a risk that the market price of an active semi‐transparent ETF may vary significantly from the ETFs net asset value and that its shares may trade at a wider bid/ask spread and, therefore, cost investors more to trade than shares of other ETFs. These risks are heightened during periods of market disruption or volatility.

Standard deviation is a statistical measure that calculates the degree to which returns have fluctuated over a given time period. A higher standard deviation indicates a higher level of variability in returns.

All corporate names are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.
Diversification and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.
Schwab Asset Management is the dba name for Charles Schwab Investment Management, Inc. Schwab Asset Management and Schwab are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.

Apple Podcasts and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries.

Google Podcasts and the Google Podcasts logo are trademarks of Google LLC.

Spotify and the Spotify logo are registered trademarks of Spotify AB.

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Many people do not enjoy the process of thinking through what happens to their assets after they pass away. But the decisions to be made are a crucial part of estate planning. Life can be complicated, and there are many advantages to having a trust in place. But the jargon surrounding trusts can be overwhelming. How can you determine which trust is right for your particular situation?

In this episode, Mark talks with Austin Jarvis. Austin is a director of estate, trust, and high-net-worth tax advice at the Schwab Center for Financial Research. He’s worked as an advanced-planning attorney and in the estate and gift tax section of the Internal Revenue Service.

They discuss how a variety of different trusts work, including the SLAT, ILIT, special-needs trust, credit shelter trust, and the most common type—the revocable living trust.

You can learn more about choice overload on the “Spoiled for Choice” episode of Choiceology with Katy Milkman.

Subscribe to Financial Decoder for free on Apple Podcasts or wherever you listen.

Financial Decoder is an original podcast from Charles Schwab. 

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. 

This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner, estate attorney, or investment manager.

Always consult with your legal counsel and tax advisors about your particular circumstances.

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

Charles Schwab & Co., Inc. ("Schwab") is affiliated with Charles Schwab Trust Company (CSTC), the corporate trustee for Schwab Personal Trust Services (SPTS). Schwab may introduce clients to CSTC but does not evaluate whether SPTS is appropriate for each client or recommend SPTS for any particular client. It is the client’s responsibility to ensure that CSTC meets his or her trust needs and to conduct any due diligence that may be required before engaging CSTC.

Schwab and Schwab Private Client Investment Advisory, Inc., a registered investment advisor and affiliate of Schwab, both earn compensation from CSTC for service provided in connection with SPTS. CSTC may invest trust assets in a wrap fee program or make use of investment advisory services, which are sponsored by Schwab and/or in which Schwab affiliates provide discretionary and non-discretionary investment recommendations. Schwab and its affiliates earn compensation for assets selected or recommended by Schwab-affiliated advisors, including management fees for Schwab affiliate mutual funds and shareholder servicing fees for mutual funds that participate in the Schwab Mutual Fund OneSource® service.

Schwab Financial Consultants who introduce you to CSTC will receive compensation if you choose to use SPTS. CSTC receives fees in connection with the administrative trust services or the investment management services as permitted pursuant to the terms of the trust instruments.

In selecting a trust service, you should consider whether to combine trust administrative services with trust investment management services and whom to select as a trustee. Third-parties may offer similar trust administrative or trust investment management services, or both, at different costs. 

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Throughout the holiday season, you might encounter dozens of appeals for charity. If you decide to give, or if you donate throughout the year, how can you maximize the impact of your gift? In this episode, Mark talks with Sam Kang, president of Schwab Charitable, a nonprofit organization established with the support of The Charles Schwab Corporation to make charitable giving simpler and more tax-efficient.

They discuss direct cash gifts, donor-advised funds, qualified charitable distributions, and other ways of giving—and which types of investors can benefit from each approach.

You can learn more about the science behind why helping others makes us feel good on the “Happiness” episode of Choiceology with Katy Milkman.

Subscribe to Financial Decoder for free on Apple Podcasts or wherever you listen.

Financial Decoder is an original podcast from Charles Schwab. For more on the series, visit Schwab.com/FinancialDecoder.

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

Important Disclosures

Investors should consider carefully information contained in the prospectus or, if available, the summary prospectus, including investment objectives, risks, charges, and expenses. Please read it carefully before investing.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Supporting documentation for any claims or statistical information is available upon request.

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

Investing involves risk including loss of principal.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Schwab Charitable™ is the name used for the combined programs and services of Schwab Charitable Fund™, an independent nonprofit organization. Schwab Charitable Fund has entered into service agreements with certain affiliates of The Charles Schwab Corporation.

A donor's ability to claim itemized deductions is subject to a variety of limitations depending on the donor's specific tax situation. Consult your tax advisor for more information.

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab Charitable recommends consultation with a qualified tax advisor, CPA, Financial Planner or Investment Manager.

Because environmental, social and governance (ESG) strategies exclude some securities, ESG-focused products may not be able to take advantage of the same opportunities or market trends as products that do not use such strategies. Additionally, the criteria used to select companies for investment may result in investing in securities, industries or sectors that underperform the market as a whole.

Diversification, asset allocation, and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets. Rebalancing may cause investors to incur transaction costs and, when a nonretirement account is rebalanced, taxable events may be created that may affect your tax liability.

Professionally managed accounts are available only through independent investment advisors with Schwab Advisor Services™, a business segment of The Charles Schwab Corporation serving independent investment advisors and includes the custody, trading, and support services of Charles Schwab & Co., Inc. While donors may recommend an advisor, Schwab Charitable must approve the recommendation. Advisors must meet certain eligibility requirements and adhere to Schwab Charitable fee and investment guidelines. You may request a copy of the investment guidelines by calling us at 800-746-6216.

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