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Investment fees can have a significant impact on your portfolio’s value over time. In the example below, reducing these costs by just 1% would yield an additional $2.2 million.
How investment costs can impact returns*
*Assumes a 6% rate of return.
The example is hypothetical and provided for illustrative purposes only. It is not intended to represent a specific investment product. Dividends and interest are assumed to have been reinvested, and the example does not reflect the effects of taxes. Past performance is no guarantee of future results.
Source: Schwab Center for Financial Research. The Schwab Center for Financial Research is an affiliate of Charles Schwab, Hong Kong, Limited.
By spreading risk over a variety of investments, a diversified portfolio is potentially better positioned to weather large market swings and provide a more stable set of returns over time. At Schwab Hong Kong, we offer a wide range of U.S. investment choices that let you build a diversified portfolio according to your own unique circumstances and tolerance for risk.
Rethinking Asset Allocation
Are you diversified enough? Learn more about rethinking asset allocation.
Your allocation influences your portfolio’s performance.
So what's the right asset allocation for you? It's the one that reflects both your risk tolerance and your risk capacity, which includes your time horizon and how much potential loss you can afford.
15% Large Cap
30% Cash Investments
35% Large Cap
10% Small Cap
5% Cash Investments
50% Large Cap
20% Small Cap
5% Cash Investments
The example below takes a hypothetical $100,000 initial investment in 1970 and applies each investing approach.
For conservative: 43 years positive return, 1 year negative return. 2.8M$ total wealth accumulated with 7.9% average annualized return. For moderate: 37 years positive return, 7 years negative return. 6.1M$ total wealth accumulated with 9.8% average annualized return. Aggressive: 34 years positive return, 10 years negative return, 7.7M$ total wealth accumulated with 10.4% average annualized return.
+ 43 Years
- 1 Year
$2.8MAvg. Annualized Return: 7.9%
+ 37 Years
- 7 Years
$6.1MAvg. Annualized Return: 9.8%
+ 34 Years
- 10 Years
$7.7MAvg. Annualized Return: 10.4%
Past performance does not guarantee future results.
Indexes are unmanaged, do not incur fees or expenses, and cannot be invested in directly. All returns include reinvestment of dividends and interest and do not include fees or expenses. If included, returns would be lower.
Performance is calculated as the weighted average of the market index returns that represent each asset class in the models. Returns include reinvestment of interest and dividends, do not account for taxes or fees, and the models are rebalanced monthly.
Actual future returns in any given year can and probably will be significantly different from the historical averages and total wealth accumulated results shown here. Strategies may not be suitable for all clients.
The indexes representing each asset class in the charts shown above and historical asset allocation models are S&P 500® Index (large-cap stocks); Russell 2000® Index (small-cap stocks); MSCI EAFE® Net of Taxes (international stocks); Barclays U.S. Aggregate Bond Index (bonds); and Citigroup 3-Month U.S. Treasury Bills (cash equivalents). CRSP 6-8 was used for small-cap stocks prior to 1979, Ibbotson Intermediate-Term Government Bond Index was used for fixed income prior to 1976, and Ibbotson 30-Day U.S. Treasury Bill Index was used for cash equivalents prior to 1978.
The information here is for general informational purposes only, does not represent a specific product, and should not be considered an individualized recommendation or personalized investment advice. Asset allocation does not eliminate the risk of investment losses.
Source: Schwab Center for Financial Research with data provided by Morningstar Inc. The Schwab Center for Financial Research is an affiliate of Charles Schwab, Hong Kong, Limited.
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