Smart global investment. Does This Valuation Of Smart Global Holdings, Inc…

Smart announces new £165m funding round: £75m investment from Chrysalis leads Series D

  • Chrysalis Investments leads the £165m Series D round
  • Round includes £110m of primary and £55m of secondary equity
  • Investment will further strengthen Smart’s global retirement technology platform offering, and expansion into the world’s largest retirement markets

Smart, the global retirement savings technology platform provider that powers the Smart Pension Master Trust, one of the ‘big four’ UK auto enrolment master trusts, has announced today that it is concluding a £165m Series D funding round. Chrysalis Investments, one of the UK’s leading crossover investors, has led Smart’s Series D funding round with a £75 million equity investment, with additional investors to be announced in the coming weeks. The overall round will comprise £110m of primary and £55m of secondary equity.

The investment from Chrysalis, whose portfolio includes Klarna, Wise (formerly TransferWise), Starling Bank, The Hut Group and Graphcore, as well as wefox, the insurtech unicorn from Germany, will see Smart further grow its retirement technology platform offering in the UK, the US, Australia and the Middle East, with additional territories to follow.

Commenting on the investment, Richard Watts, Head of Strategy and Co-Manager of Chrysalis Investments said:

“Smart is an innovator and continues to establish itself as the leading retirement technology platform provider globally. In just a few years it has disrupted the retirement savings industry, working with some of the world’s most well-known financial services providers to create a better way to save toward retirement and access funds during retirement.

“The world has changed. Just as companies like Wise and Klarna add huge benefits to their users via best-in-class financial technology, Smart offers user experience and technology to transform retirement for savers around the world. What Smart has achieved in the last 12 months alone was a real catalyst for our support and we believe that together we can help Andrew and Will achieve their global ambitions.

Chrysalis Investments joins Legal General, J.P. Morgan, the Link Group, Barclays and Natixis Investment Managers, the strategic investors to date in Smart.

Smart saw enormous growth in 2020, with assets on the platform growing by more than 160% to £1.8bn and the successful rollouts of the Smart platform with Bank of Ireland’s insurance arm, New Ireland Assurance, and with global insurance giant Zurich and the Dubai International Financial Centre in the Middle East, both at the height of the pandemic.

The co-founders of Smart, Andrew Evans and Will Wynne, said:

“Chrysalis Investments joins us at a really exciting time. Smart’s achievements over the last 12 months are testament to our amazing team, and also to the incredible resilience of both our operating model and the Smart platform that we deploy for large financial institutions and national governments. With close to a million savers on our platform already, we now have straight line visibility through to well over five million savers on the platform within the next 24 months.

“We are very excited to welcome Chrysalis as they really understand the global scale of our vision and opportunity. Chrysalis’s investment adviser, Jupiter Asset Management, is a prominent leader in UK investment and Chrysalis itself has an astonishing track record of backing Europe’s most successful tech businesses. We are delighted to join the Chrysalis portfolio.”

“We are very focused on our core goal: offering the very best technology to improve the lives of retirement savers around the world. We also recognise that there are tremendous opportunities for us to cost effectively deploy capital in MA to bring members and assets onto our technology platform in the UK, the United States and beyond and we will be pursuing such opportunities with the energy those markets’ retirement savers deserve.”

“The global retirement market is already a colossal 55trn of AUM. A huge wave of regulatory change is sweeping the globe, with governments shifting responsibility for retirement liabilities from their own balance sheet onto the mass market, via the workplace. Smart is the only proven, global, Cloud-native retirement technology solution to this challenge. Our Platform-as-a-Service model powered by our single global retirement technology platform is perfect for financial services companies and governments trying to get to grips with delivering for their members and citizens as they save for retirement and beyond. Due to all of this, Smart is set to become the global operating system for retirement.”


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Does This Valuation Of Smart Global Holdings, Inc. (NASDAQ:SGH) Imply Investors Are Overpaying?

Does the June share price for Smart Global Holdings, Inc. (NASDAQ:SGH) reflect what it’s really worth? Today, we will estimate the stock’s intrinsic value by estimating the company’s future cash flows and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. Don’t get put off by the jargon, the math behind it is actually quite straightforward.

We generally believe that a company’s value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.

Check out our latest analysis for Smart Global Holdings

Is Smart Global Holdings Fairly Valued?

We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company’s cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren’t available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.

Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today’s dollars:

10-year free cash flow (FCF) estimate

(Est = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US591m

We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.1%. We discount the terminal cash flows to today’s value at a cost of equity of 13%.

Terminal Value (TV)= FCF2032 × (1 g) ÷ (r – g) = US141m× (1 2.1%) ÷ (13%– 2.1%) = US1.4b

Present Value of Terminal Value (PVTV)= TV / (1 r) 10 = US1.4b÷ ( 1 13%) 10 = US408m

The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US999m. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US27.0, the company appears reasonably expensive at the time of writing. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent.

The Assumptions

The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don’t agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company’s future capital requirements, so it does not give a full picture of a company’s potential performance. Given that we are looking at Smart Global Holdings as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we’ve used 13%, which is based on a levered beta of 1.793. Beta is a measure of a stock’s volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.

SWOT Analysis for Smart Global Holdings

  • Earnings declined over the past year.
  • Expensive based on P/E ratio and estimated fair value.
  • Debt is not well covered by operating cash flow.
  • Annual revenue is expected to decline over the next 3 years.
  • Is SGH well equipped to handle threats?

Moving On:

Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn’t be the only metric you look at when researching a company. It’s not possible to obtain a foolproof valuation with a DCF model. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Can we work out why the company is trading at a premium to intrinsic value? For Smart Global Holdings, there are three pertinent items you should further research:

  • Risks: Take risks, for example. Smart Global Holdings has 3 warning signs (and 1 which is potentially serious) we think you should know about.
  • Future Earnings: How does SGH’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  • Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!

PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NASDAQGS every day. If you want to find the calculation for other stocks just search here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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How will challenges to globalisation impact thematic investing?

A look at the impact of deglobalisation on some of our favoured themes: Smart manufacturing, energy transition and climate change, and the circular economy.


A three-decade long process of globalisation is facing a number of challenges:

  • Geopolitical tensions between the US and China have been growing for some time;
  • Supply chain disruptions stemming from the Covid-19 pandemic have forced companies to consider whether resilience is more important than cost;
  • Russia’s invasion of Ukraine highlighted the risks of relying on a small handful of suppliers for key commodities like natural gas.

Security is becoming a paramount concern, whether that be in terms of defence, energy supplies, or security of information or technological know-how. The result has been strengthening headwinds facing “globalisation” and an unpicking of some of the trends of recent decades. We believe this will have a knock-on effect on many aspects of corporate behaviour.

Certain investment themes will be particularly in the spotlight as a result. Here, we look at the impact of this process of deglobalisation on some of our favoured themes: Smart manufacturing, energy transition and climate change, and the circular economy.

Smart manufacturers enable industrial independence

Manufacturing reshoring or “near shoring” – bringing production closer to a company’s home market. is already happening. Smart manufacturers stand to gain the most from this shift. They are the suppliers of sustainable new innovations in hardware, software and new materials, and therefore are the facilitators of this desired manufacturing independence.

The semiconductor sector is leading the reshoring charge. US concerns about overreliance on China for manufacturing high-end semiconductors led to the passing of the Chips Act in 2022. This includes 52.7 billion of incentives for semiconductor research development and manufacturing.

And it goes beyond chips. The US has also passed the Inflation Reduction Act which envisages the mobilisation of 1.5 trillion of capital into clean energy, including advanced manufacturing production credits. Europe has followed suit with its Green Deal Industrial Plan which offers €390 billion of funding to enhance the EU’s manufacturing strength in strategic technologies like solar and wind energy, heat pumps, and batteries.

Part of the aim of these plans is to ensure secure supply of the critical technologies needed for major shifts in digitalisation and the transition to green energy. Part of it is also to create skilled jobs and “future-proof” the competitiveness of the US and European economies.

Smart manufacturers are also at the leading edge of the wave of innovation in artificial intelligence (AI) and robotics. Using robotics can bring down the cost of switching from a low labour cost destination to a higher cost one. This may be especially important in regions where there are already labour shortages.

Like many Western nations, China is facing a demographic challenge as the working age population shrinks. Labour shortages tend to push up wages, potentially encouraging companies to invest in automation.

Innovations such as embedded artificial intelligence and better vision systems, as well as price deflation, are making automation investments the most economically attractive they have ever been. Smart manufacturers producing equipment such as robotics or sensors will be the winners here.

Russia-Ukraine war highlights importance of energy security

The imperative to switch from fossil fuels to green energy in order to limit global warming is well understood. But part of the reason why governments are keen to invest in energy transition technologies is to ensure security of supply. The danger of relying on others for energy has been demonstrated by the impact of Russia’s invasion of Ukraine on natural gas prices.

Countries could be self-sufficient in energy if they rely on wind, solar, wave, or biomass power. This is part of what has prompted the wave of government stimulus directed at renewable energy – such as the US IRA or EU GDIP mentioned above.

Of course, just because governments are seeking to expand renewable energy capacity and attract renewables firms to their countries doesn’t mean that only companies domiciled in those countries will benefit. Many of the companies that will benefit from the push for energy security and investment are global operators.

The supply chain disruptions witnessed as a result of the pandemic have been detrimental for many of the companies operating in the energy transition space. Company earnings and valuations have suffered amid higher raw materials costs and logistical challenges. But those are short-term impacts compared to the long-term structural shift towards renewable energy.

Circular economy keeps goods and materials in use locally

The move towards a more local supply chain also plays into the circular economy theme.

A circular economy delivers what consumers need without accepting that materials will be discarded and pollution created in the process. It challenges the existing “take-make-waste” approach, which consumes finite resources that are used briefly, and then discarded, often directly to landfill. A circular economy designs products and services with efficiency, reusability and recyclability in mind.

Keeping products and materials in use locally reduces reliance on distant suppliers, enabling simpler logistics and reducing energy consumption.

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.

Savings and investments tech platform Smart receives backing from Chrysalis

Smart Smart, a London, England-based savings and investments technology platform provider, announced on Monday a 228M investment from Chrysalis.

Smart, a London, England-based savings and investments technology platform provider, announced on Monday a 228M investment from Chrysalis.

About Smart

Smart is a global savings and investments technology provider. Its mission is to transform retirement, savings, and financial well-being, across all generations, around the world.

Smart partners with financial institutions (including broker-dealers, RIAs, retirement providers, insurers, asset managers, banks) and financial advisers to deliver retirement savings and income solutions that are digital, customized, and cost-efficient.

Smart, founded in the UK, operates in the USA, Europe, Australia, and the Middle East with over a million savers and over 5 billion in assets. Smart saw over 2,000% growth in assets on its platform since 2018.

Legal General, J.P. Morgan, Fidelity International Strategic Ventures, Link Group, Barclays, Natixis Investment Managers, Chrysalis Investments, DWS Group and Aquiline Capital Partners are all investors to date in Smart.

For more information, please visit

Media contact for Smart:

Heather ValleCaliber Corporate Advisers for

It’s a simple truth: Investing is generally better than not investing.

While it’s natural to want to wait until market conditions are right, that’s a call even professional investment managers find tough to make. A better strategy is to just get started.

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Don’t delay

Research shows that on average, even investors with bad timing earned twice as much as people who held their savings in cash-like investments over a 20-year period. And those who stick to their investment plan achieve a higher net worth than those who don’t. 1 There isn’t a magic formula—reaching your financial goals takes time, discipline and a good investing strategy. Here’s how you can get started.

Starting earlier rather than later allows you to benefit longer from compounding returns. But data also show that staying the course and continuing to invest regardless of market conditions can lead to greater wealth accumulation.

Whether you’re just starting to invest or considering making changes to your existing plan, remember: Showing up is half the battle. Even if you don’t invest in all the right things at the right time—who does?—you’ll generally be more successful on the field than on the sidelines.

Chart shows average ending wealth in each 20-year period from 1926–2016. Treasury bills were used for the cash investment example. In examples where waiting to invest was a factor, the yearly 2,000 investments were placed in Treasury bills while waiting to invest in stocks. Stocks are represented by the SP 500 ® Index, with all dividends invested. Indexes are unmanaged, do not incur fees or expenses, and cannot be invested in directly. Fees and expenses would lower returns. This chart represents a hypothetical investment and is for illustrative purposes only. The actual annual rate of return will fluctuate with market conditions. Hypothetical performance is no guarantee of future results. Source: Schwab Center for Financial Research.


Temi: My mom was a stay at home mom, but it wasn’t until her and my dad got divorced that she became a fulltime entrepreneur. It made me feel that anything is possible, because I thought if she can do it, I can do it. I decided to set up my own company when I was pregnant with our son. And I’d noticed over time that when I was working at home, it was just really nice to be able to get out of the house. There are obviously lots of co-working spaces but they tended to feel very large, very corporate, very impersonal. So when I set up my co-working space for women, we knew we wanted it to be very different from other office environments. Starting the co-working space definitely felt daunting. I was already running my own business. I have a small child. But the way I tend to look at things, I’m like yes it might be a challenge, but imagine the rewards if everything works out well. I think it’s really important to start paying attention to your money as soon as you can so that one day you don’t find yourself in a position where you wish you had been paying attention. I started investing about a year ago. And I just started to think, Why not just start now? I did have grand goals in mind for being completely financially literate, but I started to realize that time might not necessarily come around any time soon, so I just thought, Let me just start, so at least that way, I’ve gotten started. I feel the biggest benefit with investing is that you’re putting your money to work. Investing is in a sense giving your money a job to do. Your job is to grow, so please go and grow, and that’s what investing is for me. The best advice I’ve had comes from a Chinese proverb and it is: The best time to plant a tree was 20 years ago. The second best time is now.

Understand asset allocation

So you’ve decided to start investing. Next question: What’s your goal? Is it to build up a retirement fund over several decades? Save for a down payment on a house in a few years? Once you know what your goal is, you can think about the best way to get there. Your path will be guided not only by how much you invest, but how you invest it—in other words, your asset allocation.

Asset allocation is simply the practice of distributing your money among different asset categories such as stocks, bonds, cash and commodities to balance risk and reward and get you closer to your financial goals. Generally speaking, a person who has a long time to save and who’s willing to weather the ups and downs of the stock market has a high tolerance for risk and could see that rewarded with greater performance (or punished with greater losses). A person who doesn’t have much time to save and doesn’t have a lot of stomach for risk could see smaller potential gains, but also smaller potential losses. Bottom line: These two people should have different asset allocations because they have different goals, time horizons, and risk tolerances.

Very few investors have been successful in timing the market. So instead of worrying about that, consider thinking more about asset allocation. Research has shown that it’s one of the most important investing decisions you can make. The graphic below shows how changing the mix of assets you’re invested in can have a dramatic effect on performance—and on your exposure to risk.

Asset allocation has evolved

Today, investors have access to more niche asset classes, so a moderate portfolio can look more like this.

For illustrative purposes only. Not representative of any specific investment or account. For further information see: Indexes used for Charts 2 and 3 in the Disclosures section.

What is your risk tolerance?

Use the slider to select a level of risk. Then see how a hypothetical portfolio with that risk level performed each year over a 30-year period in the graph.

For illustrative purposes only. Not representative of any specific investment or account.

Annualized returns are calculated using data from 1989 through 2019 and include reinvestment of dividends, interest, and capital gains. Stocks are represented by the SP 500 Index, bonds by Barclays U.S. Aggregate Bond Index and cash by the IA SBBI U.S. 30-Day Treasury Bill Index. Indexes are unmanaged, do not incur fees or expenses, and cannot be invested directly. Past performance is not a guarantee of future results.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice.

Diversify your portfolio

The beauty of diversification is that it can help you manage the optimal mix/balance of risk and return.

The three traditional primary asset classes—stocks, bonds and cash—tend to fare differently in various market environments. For instance, stocks often perform well when economic growth is strong, while bonds may outperform when growth slows. By investing in all three of the basic asset classes—as well as commodities and possibly other investments—you’re diversifying. This helps you minimize your reliance on any one area of the market and can help maximize the possibility that you’ll own assets that appreciate in value.

And diversification can go even further than that. Most investors can remember periods when U.S. stocks performed better than international stocks, when blue chips did better than high—growth stocks or when technology companies outperformed health care companies. By investing in different asset classes, you can reduce your exposure to any one particular region or industry.

Finding the right balance can be challenging, but there’s help out there. An investment adviser can help you allocate your investment appropriately, based on your risk tolerance and investment time horizon. There are resources online that can help, as well. And if you’d rather let someone else do most of the driving, consider investing through an automated investment advisory service, such as Schwab Intelligent Portfolios ®.

Why diversify?

Because markets are unpredictable. For example, Emerging Markets Stocks was the top performing asset class in 2009 with a 78% annual return.

See if you can choose the top-performing asset classes from 2014 to 2019. Click your top pick for 2014 to get started.

Asset class performance is represented by annual total returns and assumes reinvestment of dividends, interest and capital gains. See disclosures at the bottom of the page for more information about the market indexes used. Indexes are unmanaged, do not incur fees or expenses, and cannot be invested in directly. Past performance is no guarantee of future results.

Source: Schwab Center for Financial Research.

Rebalance periodically

You’ve figured out the best asset allocation for your risk tolerance, so you can turn on autopilot, right? Not exactly.

Even if you do nothing to your portfolio, the markets will eventually change it for you. That’s because some of your investments will perform better than others, taking up more room in your portfolio over time—while investments that haven’t done as well will take up less room. This can cause your portfolio to drift away from its target asset allocation. When that happens, it may no longer reflect your risk tolerance. You may be taking on more or less risk than you’re comfortable with.

Buying or selling investments in order to restore your portfolio back to its target asset allocation is called rebalancing. Let’s say you want stocks to make up half of your portfolio, but after a recent market rally, they’ve risen to 70%. To restore your target mix, you may need to sell some stocks and/or buy more of something else, such as bonds.

Sounds easy, right? It can be. But it can get tricky if you layer in other factors. For instance, how often should you rebalance? Which securities should you sell, and which should you buy? Ideally, you want to keep an appropriate mix of domestic versus international stocks, short-term versus long-term bonds, etc. Tax implications and transaction costs should be considered, as well.

Rebalancing can be challenging for an individual investor to manage manually. If this isn’t something you’re up for, a sophisticated service, like Schwab Intelligent Portfolios, will do this work for you when your asset allocation strays too far from predetermined percentages.

Keep an eye on fees

Markets rise and fall, and economic cycles are unpredictable. However, there’s one thing that’s certain: fees.

Most fees fall into four main categories: commissions, fund fees, advisory fees and account fees. If you trade individual stocks or exchange-traded funds (ETFs), you will likely be charged commissions each time you buy or sell securities. If you invest in a mutual fund or ETF, you’ll pay an operating expense or a recurring annual fee to cover the fund’s management, trading and operational expenses. If you go the managed route, most advisors charge a fee to build and oversee your portfolio, which can either be a fixed amount or a percentage of your total assets. Additional fees may be assessed for redemptions, wire transfers, failure to maintain a minimum balance or other reasons.

The question is: How much are you paying? Fees can vary widely within each category—for instance, actively managed funds typically charge more than passive index-tracking funds, simply because of the greater work involved. Funds that invest in smaller, more niche and global investments may charge more for the same reason. As long as you’re comparing apples to apples, it’s worth shopping around to make sure you’re not paying excessively high fees for the same market exposure and performance potential.

Look at it this way: While fees may appear small at the outset, even 1.2% in fees can reduce your earnings significantly over time. For example, let’s say you have 100,000 invested in each of two diversified portfolios: Portfolio A charges 1.2% in fees and Portfolio B charges 0.25% in fees. Assuming a 6% annual rate of return over a 30-year period, Portfolio B would earn about 130,000 more than Portfolio A.

For illustrative purposes only. Portfolios A and B assume a 6% annual rate of return over a 30-year period. Portfolio A assumes a 1% advisory fee and a.20% operating expense ratio charged annually. Portfolio B assumes only a.25% operating expense ratio charged annually. Hypothetical performance is no guarantee of future results. The impact of fees on a portfolio can have equal impact during a negative performance period. The chart does not reflect all fees that may be charged and is not representative of any actual investment, product, or fee structure.

The impact of fees

Fees are common when investing, but it’s important to keep an eye on how high they get. Excessive fees can stunt a portfolio’s growth—costing you thousands of dollars over time. Use the sliders below to see the effect fees can have on a 100,000 ETF portfolio over a 40-year time span. The bottom line: Paying attention to fees not only helps to minimize costs, but also keeps more of your money invested in the market and working for you.

For illustrative purposes only. These projections assume a 6% rate of return, are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Fees will impact your portfolio even during periods of negative market performance. The chart does not reflect all fees that may be charged and is not representative of any actual investment, product, or fee structure.

Consider tax-loss harvesting

Losses are never pleasant, but there can be a silver lining: tax savings through tax-loss harvesting.

When you sell a security for more than you originally paid for it, the profit is a capital gain. It’s taxable if it occurs in a taxable account—not a 401(k) or IRA, for instance, which are tax-deferred accounts.

In the 2018 tax year, short-term capital gains (those on investments held for a year or less) will be taxed at your ordinary income tax rate, while long-term capital gains, or investments held for longer than a year, are taxed at either 15% or 20%, depending on your income level.

A security sold for less than you paid for it generates a capital loss. If this occurs in a taxable account, you can use the loss on your tax return to offset realized capital gains, by deferring current tax liabilities. In addition, you can offset up to 3,000 in ordinary income to the extent total losses exceed total gains. If there are still losses left after all that, they can be used to offset gains and income in future tax years. To learn more about how tax-loss harvesting works, including the potential pitfalls surrounding the wash sale rule, which disallows losses if you repurchase the same or a substantially identical security within 30 days, click here.

Simplify your investing

Investing can be time consuming and complex. Technology is helping to simplify it.

For some, acting on the above principles is a welcome challenge, but if you’re busy or don’t enjoy managing money, you might let things slide. Simplifying your investing can render the process less daunting and make it easier to stay engaged.

For example, if you hold multiple accounts at various financial services companies, it can be tough to get a clear picture of your total portfolio. This can keep you from taking advantage of tax-efficient investing strategies or effective retirement income planning. Combining accounts with the same objective could make it easier to keep track of your investments.

Setting up automatic contributions into your investment accounts also can make it easier to stick to your plan. In addition, making fixed regular purchases over a long period of time—a strategy known as dollar cost averaging—means you can buy more shares when are down, and fewer shares when are up.

Want to simplify your investing even more? Let an automated investment advisory service like Schwab Intelligent Portfolios do the work for you. This service combines a sophisticated algorithm with a dedicated team of experienced analysts to produce diversified ETF portfolios that can help investors pursue their financial goals.

Periodic investment plans like dollar cost averaging do not ensure a profit and do not protect against losses in declining markets.

Key takeaways

Schwab Intelligent Portfolios makes it easy to get started. Simply answer 12 questions about your goals and risk tolerance.

Schwab Intelligent Portfolios can help you figure out the right assets to align with your investing goals.

Get a diversified ETF portfolio—across up to 20 asset classes—that’s appropriate for your stated goals, risk profile and time horizon.

When your asset allocation strays outside its target range, Schwab Intelligent Portfolios will rebalance to get you back within range.

The service, available for accounts with 50K or more, helps you take advantage of potential tax savings if an investment declines in value.

Simplify your investing with Schwab Intelligent Portfolios. Answer 12 questions, fund your account, and enjoy a globally diversified ETF portfolio with human support available 24/7, 365 days a year.

Original data was based on 1,269 observations and came from a special retirement planning module for the 2004 Health and Retirement Study targeting Americans over the age of 50. Source: Lusardi, Annamaria, and Mitchell, Olivia S., Financial Literacy and Planning: Implications for Retirement Wellbeing, May 2011, page 29. ©2011 by Annamaria Lusardi and Olivia S. Mitchell. All rights reserved.

Investing involves risks including possible loss of principal.

Diversification, automatic investing, and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.

You should read the tax-loss harvesting disclosures on the Website and in the Brochure before choosing the tax-loss harvesting feature if you decide to enroll in Schwab Intelligent Portfolios. Neither the tax-loss harvesting strategy for the Schwab Intelligent Portfolios program nor any discussion herein is intended as tax advice. Neither Charles Schwab Co., Inc. (Schwab) nor its affiliates, including but not limited to Charles Schwab Investment Advisory, Inc. represent that any particular tax consequences, benefits, or outcomes will be obtained.

Indexes used for Charts 2 and 3

U.S. large company stocks: SP 500 ® Index; U.S. small company stocks: Russell 2000 ® Index; Int’l large company stocks: MSCI EAFE ® Index; Int’l small company stocks: MSCI EAFE Small Cap Index; Emerging markets stocks: MSCI Emerging Market Index; REITs: SP US REIT Index; U.S. Treasuries: Barclays US Treasury 3-7 Year Index; Investment-grade corporate bonds: Barclays US Credit Index; High-yield corporate bonds: Barclays Corporate High-Yield Index; International bonds: Barclays Global Aggregate Ex-USD Index; Emerging markets bonds: Barclays Emerging Markets USD Aggregate Index; Precious metals: SP GSCI Precious Metals Index; Cash: Barclays US Treasury Bill 1-3 Month Index

Indexes used for Chart 4

U.S. large company stocks: SP 500 ® Index; prior to 1957, the SP 500 was simulated using a well-accepted methodology provided by Ibbotson; U.S. small company stocks: Russell 2000 ® Index; the CRSP 6-8 Index was used prior to 1979; International stocks: MSCI EAFE ® Net of Taxes; Bonds: Barclays U.S. Aggregate Index; the Ibbotson Intermediate-Term Government Bond Index was used prior to 1976; Cash and cash investments: Citigroup 3-Month U.S. Treasury Bill Index; the Ibbotson U.S. 30-day Treasury Bill Index was used prior to 1978.

Index Definitions

Bloomberg Barclays Global Aggregate ex-USD Index is designed to be a broad-based measure of global investment-grade fixed income markets outside of the U.S.

Bloomberg Barclays U.S. Aggregate Index is a market-value-weighted index of taxable investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities, with maturities of one year or more.

Bloomberg Barclays U.S. Corporate High Yield Index covers the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and SP is Ba1/BB/BB or below.

Barclays U.S. Credit Index measures the investment grade, USD-denominated, fixed-rate, taxable corporate and government-related bond markets. It comprises of the U.S. Corporate Index and a non-corporate component that includes foreign agencies, sovereigns, supranationals and local authorities. The U.S. Credit Index is a subset of the U.S. Government/Credit Index and U.S. Aggregate Index.

Bloomberg Barclays U.S. Treasury Bill 1-3 Month Index includes all publicly issued zero-coupon U.S. Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have 250 million or more of outstanding face value. In addition, the securities must be denominated in U.S. dollars and must be fixed rate and non-convertible.

Bloomberg Barclays U.S. Treasury 3-7 Year Index measures the performance of public obligations of the U.S. Treasury that have a remaining maturity between three and seven years.

Bloomberg Barclays Emerging Markets USD Aggregate Index includes USD-denominated debt from emerging markets in the following regions: the Americas, Europe, the Middle East, Africa and Asia.

Citigroup 3-Month U.S. Treasury Bill Index measures monthly total return equivalents of yield averages that are not marked to market. The index consists of the last three three-month Treasury bill issues.

CRSP 6-8 Index is a small-cap index created and maintained by the Center for Research in Security (CRSP) at the University of Chicago’s Graduate School of Business. CRSP capitalization-based indexes include common stocks listed on the NYSE, AMEX, and the NASDAQ National Market. The CRSP 6-8 Index refers to the 6th through the 8th deciles and excludes micro-caps.

Ibbotson Intermediate-Term Government Bond Index is constructed from monthly returns of non-callable bonds with maturities of not less than five years, held for the calendar year.

Ibbotson U.S. 30-day Treasury Bill Index is compiled from Wall Street Journal for 1977 to the present and the CRSP U.S. Government Bond File from 1926 to 1976.

MSCI EAFE ® Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE Index consists of the following 21 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.

MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The index consists of the following 23 emerging market country indices: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Russia, Qatar, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.

MSCI EAFE Small Cap Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of small cap representation across developed markets, excluding the U.S. and Canada. Developed market countries in the MSCI-EAFE Small Cap Index include: Australia, Austria, Belgium, Denmark, Finland, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Signapore, Spain, Sweden, Switzerland and the UK.

Russell 2000 ® Index is composed of the 2,000 smallest companies in the Russell 3000 Index, which contains the largest 3,000 companies incorporated in the United States and represents approximately 98% of the investable U.S. equity market.

SP U.S. REIT Index defines and measures the investable universe of publicly traded real estate investment trusts domiciled in the US.

SP 500 ® Index is a market-capitalization-weighted index that consists of 500 widely traded stocks chosen for market size, liquidity, and industry group representation.

SP GSCI Precious Metals Index provides investors with a reliable and publicly available benchmark for investment performance in the precious metals market.

The indexes are unmanaged, do not incur fees and expenses, and cannot be invested in directly.

Please read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs.

Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ are made available through Charles Schwab Co. Inc. (Schwab), a dually registered investment advisor and broker dealer. Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. (CSIA). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation.

There is no advisory fee or commissions charged for Schwab Intelligent Portfolios. For Schwab Intelligent Portfolios Premium, there is an initial planning fee of 300 upon enrollment and a 30-per-month advisory fee charged on a quarterly basis as detailed in the Schwab Intelligent Portfolios Solutions™ disclosure brochures. Investors in Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium (collectively, Schwab Intelligent Portfolios Solutions) do pay direct and indirect costs. These include ETF operating expenses which are the management and other fees the underlying ETFs charge all shareholders. Schwab does not charge an advisory fee for the SIP Program in part because of the revenue Schwab Bank generates from the cash allocation (an indirect cost of the Program). The portfolios include a cash allocation to FDIC‐insured Deposit Accounts at Charles Schwab Bank, SSB (Schwab Bank). Schwab Bank earns income on the deposits, and earns more the larger the cash allocation. The lower the interest rate Schwab Bank pays on the cash, the lower the yield. Some cash alternatives outside of Schwab Intelligent Portfolios Solutions pay a higher yield. Schwab Intelligent Portfolios Solutions invests in Schwab ETFs. A Schwab affiliate, Charles Schwab Investment Management Inc., receives management fees on those ETFs. Schwab Intelligent Portfolios Solutions also invests in third-party ETFs. Schwab receives compensation from some of those ETFs for providing shareholder services, and also from market centers where ETF trade orders are routed for execution. Fees and expenses will lower performance, and investors should consider all program requirements and costs before investing. Expenses and their impact on performance, conflicts of interest, and compensation that Schwab and its affiliates receive are detailed in the Schwab Intelligent Portfolios Solutions disclosure brochures.

The cash allocation in Schwab Intelligent Portfolios Solutions™ will be accomplished through enrollment in the Schwab Intelligent Portfolios Sweep Program (Sweep Program), a program sponsored by Charles Schwab Co., Inc. By enrolling in Schwab Intelligent Portfolios Solutions, clients consent to having the free credit balances in their Schwab Intelligent Portfolios Solutions brokerage accounts swept to deposit accounts at Charles Schwab Bank through the Sweep Program. Charles Schwab Bank is an FDIC-insured depository institution affiliated with Charles Schwab Co., Inc. and Charles Schwab Investment Advisory, Inc.

Schwab Intelligent Portfolios ® and Schwab Intelligent Portfolios Premium™ are designed to monitor portfolios on a daily basis and will also automatically rebalance as needed to keep the portfolio consistent with the client’s selected risk profile. Trading may not take place daily.

Tax-loss harvesting is available for clients with invested assets of 50,000 or more in their account. Clients must choose to activate this feature. The tax-loss harvesting feature that is available with Schwab Intelligent Portfolios Solutions™ is subject to significant limitations which are described on the Schwab Intelligent Portfolios Solutions website and mobile application (collectively, the Website) as well as in the Schwab Intelligent Portfolios Solutions™ disclosure brochures (the Brochures), and the IRS website at You should consider whether to activate the tax-loss harvesting feature based on your particular circumstances and the potential impact tax-loss harvesting may have on your tax situation. You should read the tax-loss harvesting disclosures on the Website and in the Brochures before choosing the tax-loss harvesting feature. Neither the tax-loss harvesting strategy nor any discussion herein is intended as tax advice, and neither Charles Schwab Co., Inc. nor its affiliates, including but not limited to Charles Schwab Investment Advisory, Inc., represents that any particular tax consequences will be obtained.

Diversification, automatic investing and rebalancing strategies do not ensure a profit and do not protect against losses.

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