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T H E B OT TO M L I N EYou can still contribute to your IRA for 2020.Log in to schwab.com/contribute today.A Cut Above?Why stock splits may soonbe a thing of the past.LEARNMOREFind out more about Schwab Stock Slices at schwab.com/stockslices.6 C H A R L E S S C H WA B SPRING 2021reducing your own contributionswould only compound the issue.”current style of investing is still suitedto your needs,” Rob says.3 Review your plan: Sometimes welet our retirement plans run on autopilot, and that’s never a great idea.“Perhaps the loss of your employermatch—even temporarily—can serveas a catalyst to review your goals andsavings strategy, and determine if yourWhether your company has cut backon matching contributions or not, onething’s for sure: “Sticking to your plan,even when times are tough, gives youthe best shot at reaching your goal,”Rob says. “Your future self will thankyou for it.”See page 38 for important information. The information provided here is for generalinformational purposes only and should not be considered an individualized recommendation orpersonalized investment advice. The investment strategies mentioned here may not be suitablefor everyone. Each investor needs to review an investment strategy for his or her own particularsituation before making any investment decision. (0321-0VKJ)re stock splits a boon for investors—or just a numbers game?That’s the question many investorsmay be pondering in the wake of 2020’shigh-profile Apple and Tesla splits.A stock split allows a companyto increase the number of shares incirculation with no change to itsmarket value, thereby making sharesmore affordable to individual investors. In a 2-for-1 split, for example,every share of a stock trading at 400would be divided into two sharestrading at 200.Such splits often provide a shortterm price boost as investors rush tosnap up lower-priced shares. Between2012 and 2018, for instance, large-capstocks that split outperformed the S&P500 Index by an average of nearly 5%after one year, according to Nasdaq.Despite the potential for short-termoutperformance, however, investorsshouldn’t scramble to purchase sharesof a stock just because they’re cheaper.“When a stock splits, it can feel likeyou’re getting a better value becauseAyour money can buy more shares,” saysSteve Greiner, senior vice president ofSchwab Equity Ratings . “However,a split doesn’t change a company’sunderlying health—nor does it tellyou anything about its long-termprospects.”Instead, you should focus on a company’s fundamentals when consideringa prospective stock investment. “Wesuggest looking for companies withlow debt balances, lower valuations,and strong earnings growth, which tellyou more about a stock’s value than theprice tag does,” Steve says.That said, if your research pointsyou toward particularly pricey stocks,you’ve still got options—namely,fractional shares. With Schwab StockSlices , for example, you can buy afractional share of some of America’sleading companies for as little as 5.“The emergence of fractional sharesall but removes the barrier of loftyshare prices—and ultimately mightundercut the power of stock splitsgoing forward,” Steve says.See page 38 for important information. Schwab Stock Slices is not intended to be investmentadvice or a recommendation of any stock. Investing in stocks can be volatile and involvesrisk, including loss of principal. Consider your individual circumstances prior to investing. All corporate names are for illustrative purposes only and are not a recommendation, an offerto sell, or a solicitation of an offer to buy any security. Past performance is no guaranteeof future results and the opinions presented cannot be viewed as an indicator of futureperformance. (0321-0UC3)I L LU S T R AT I O N S B Y A D R I A N A B E L L E TNEXTSTEPS2 Keep it up: If you don’t have anysurplus cash, at least try to maintainyour current contributions. “Money istight for a lot of people right now, butcontinuing to make regular retirementcontributions is the best way to combat a reduced or suspended employermatch,” says Rob Williams, vicepresident of financial planning at theSchwab Center for Financial Research.“Following your employer’s lead by

BINGO!Are you taking the right steps toward a healthy financial future? See how manymilestones you can cross off in each category—and which await your IZINGRETIREMENTEXTRACREDITCapture the fullemployer matchon your 401(k)Pay a little extraon your mortgageeach monthMax outyour 401(k)contributionsPay off yourmortgage beforeretirementResearch investmentoptions for yourhealth savingsaccount, if eligibleName or updatebeneficiaries on allaccountsImprove yourinvesting knowledgethrough anonline workshopContribute toa health savingsaccount,if eligibleCreate a budgetbased on your idealretirement, includinglocation and lifestyleSave even moretoward your goalswith a taxablebrokerage accountDiversify yourportfolio to matchyour goals and risktolerancePay off yourcredit cards in fulleach monthFREESPACEReview yourSocial Securitystatement formissing incomeinformationEducate the youngpeople in yourlife about investingCreate anemergency fundContribute toa 529 planContribute toan IRAMake a plan forlong-term careGift any individualup to 15,000annually withouttriggering thefederal gift taxPrepare a willTrack your spendingand cut backwhere possible toboost your savingsCreate afinancial planCreate a tax-smartincome-withdrawalstrategyMake a tax-smartcharitable gift ofappreciated assetsHow’d you do?Got a horizontal or diagonal bingo? Excellentwork—you’ve completed at least one task across allfive categories. Now drill down into each individualcategory to add some depth to your plan.NEXTSTEPSGot a vertical bingo? Great job! You’ve gone deepin a key area of financial planning. Now try to addsome breadth with a horizontal or diagonal bingo—or go big and complete the whole card.Need help getting started or putting your plan into action? Work one-on-one with a CertifiedFinancial Planner professional when you enroll in Schwab Intelligent Portfolios Premium .Learn more at schwab.com/portfoliospremium.See page 38 for important information. Please read the Schwab Intelligent Portfolios Solutions disclosure brochures for important information, pricing, anddisclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs. Schwab Intelligent Portfolios and Schwab IntelligentPortfolios Premium are made available through Charles Schwab & Co. Inc. (“Schwab”), a dually registered investment advisor and broker-dealer. Portfolio managementservices are provided by Charles Schwab Investment Advisory, Inc. (“CSIA”). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation. The informationprovided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. Theinvestment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situationbefore making any investment decision. (0321-0UX3)SPRING 2021 ON INVESTING 7

T H E B OT TO M L I N EAn Ounce of PreventionHaving a plan in place can help you recover faster fromthe unexpected.ith all the bad news over the past year, few of us want to entertainthe prospect of future disasters. Yet even a little preparation canmake a big difference in the face of an emergency—and may even helpyou sleep a little easier in today’s uncertain world. Here are some practicaltips to get you started.WSock away an emergency fund: Try tohave enough cash on hand to cover threeto six months’ worth of essential expenses,saved in an account you can access immediately. If you suffer a significant loss,this money can help bridge the gap untilyou receive an insurance payout or anygovernment assistance for which you maybe eligible.Shore up your cash reserves: If you’reretired, try to avoid tapping investments in the midst of a downturn byhaving a year’s worth of expenses inrelatively liquid investments (a high-yieldchecking account or a money marketfund, for example), plus another two years’worth of funds in bonds or short-termcertificates of deposit. Likewise, if you’llneed money in the coming few yearsto fund other goals—such as paying forcollege or purchasing a home—considerinvesting those funds in a relatively conservative portfolio of bonds and cash, withfew, if any, stocks.Check your insurance: Review yourhomeowner’s or renter’s policy to see ifyou’re adequately covered. You also maywant to talk to your agent about whetheryou should consider additional coverage,such as earthquake, fire, or flood—orumbrella insurance for losses not coveredby the other policies.LET’STALKNeed help thinking through your emergency plan? Call 888-484-5340to speak with a Schwab investment professional.See page 38 for important information. The information provided here is for general informationalpurposes only and should not be considered an individualized recommendation or personalizedinvestment advice. The investment strategies mentioned here may not be suitable for everyone. Eachinvestor needs to review an investment strategy for his or her own particular situation before makingany investment decision. Investing involves risk, including loss of principal. (1120-0068)8 C H A R L E S S C H WA B SPRING 2021Inventory your valuables: Take extensive photos or video of your home andvaluables, then save them securely onlineor on a thumb drive in a fire- and waterproof box. This will make insurance claimsmuch easier in case of fire, flood, theft, orother damage.I L LU S T R AT I O N B Y A D R I A N A B E L L E TProtect important documents: If theunthinkable happens and your home isdestroyed, you’ll need certain documentsright away to start the recovery process.Put copies of birth certificates, driver’slicenses, insurance policies, passports, trustdocuments, wills, and other key financialrecords in a fire- and waterproof box. Betteryet, keep digital copies of important documents in a secure online location so youcan recover them from anywhere.

The Basics ofCost Basisprofit or loss but also any taxes youmight owe.When instructing your brokeragefirm which shares to sell, you canchoose from one of several methodsfor calculating your cost basis:How you sell an investmentcan seriously affect yourtax bill.First in, first out (FIFO) means yourshares will be sold from oldest tonewest.n Last in, first out (LIFO) means yourshares will be sold from newest tooldest.n High cost means your shares will besold from highest cost basis to lowestcost basis.n Low cost means your shares will besold from lowest cost basis to highestcost basis.n Specific identification means yourshares will be sold however you see fit.nnytime you’re looking to sell aninvestment, your gain or losswill be determined by calculating thedifference between the cost basis—your purchase price plus tradingcosts and/or commissions—and thecurrent market price. But when you’vepurchased the same investment severaltimes over the years, you’re likely tohave a different cost basis for eachtransaction—and which shares youdecide to sell can affect not only yourASo, which method is right for you?“Unless you specify otherwise, atSchwab the default method for everything except mutual funds is FIFO,”says Hayden Adams, CPA, CFP , director of tax and financial planning at theSchwab Center for Financial Research.(For more on mutual funds at Schwab,see “What about mutual funds?”below.) “However, in many casesyou’d be better served using specificidentification, which allows you to sellparticular shares and therefore givesyou the greatest control over your taxbill” (see “Case in point,” below left).“It’s really just a matter of ensuringthat whatever method you go with isin line with your specific goals for thesale,” Hayden says. When in doubt,discuss your options with a qualifiedtax advisor before taking action.Case in pointLet’s say you own 200 shares of XYZ stock, which currently have an overall netloss. You decide to sell 100 shares to lock in some losses, which will allow you tooffset part of your taxable income for the year. Because you purchased the stockin lots of 50 shares, however, each purchase has its own cost basis—and not all ofthem are underwater. For example:If you sell your shares using the default method—first in, first out—Lots 1 and 2will be sold, resulting in potential gains.Potentialgain: 1,125Cost basis: 11,375Lot 1Market value: 12,500Potentialgain: 2,075Cost basis: 10,425Lot 2Marketvalue: 12,500CostBasis: 11,375On the other hand, if you were to choose last in, first out (or specificidentification), you could sell Lots 3 and 4, potentially resulting in yourdesired losses.Market value: 12,500NEXTSTEPSPotentialloss:– 3,495Cost basis: 15,995Lot 4Market value: 12,500 0 4,000At Schwab, the default costbasis method for mutual funds is“average cost,” which is calculatedby dividing the total dollar amountinvested in a fund by the numberof shares held. You can elect tochange your cost basis method tospecific identification, which allowsyou to choose which shares to sell.Be aware, however, that if you’vepreviously sold the fund using theaverage cost method, the newmethod will apply only to thoseshares you purchase going forward.Potentialloss:– 3,440Cost basis: 15,940Lot 3What about mutualfunds? 8,000To review or update your default cost basis methods for yourSchwab accounts, log in to schwab.com/accountsettings. 12,000 16,000See page 38 for important information. This information does not constituteand is not intended to be a substitutefor specific individualized tax, legal, orinvestment planning advice. Where specificadvice is necessary or appropriate, Schwabrecommends consultation with a qualifiedtax advisor, CPA, financial planner, orinvestment manager. Examples providedare for illustrative purposes only and notintended to be reflective of results you canexpect to achieve. (0321-066L)SPRING 2021 ON INVESTING 9

THERICHARDSGROUPTRG JOB #:SCH20 057918Charitable PrintCLIENT:Schwab CharitableFundJOB NAME:The Modern WayPUB:OnInvesting/ONWARDTRIM:7.9375" x 10.25"LIVE:7.4375 x 9.75BLEED:8.1875 x 10.5INSERTION DATE:2021COLOR4/C SWOPFORQUESTIONS CALL:Pam Zmud214.891.5205Turning appreciated investmentsinto charitable donations.A modern way to give.The Schwab Charitable Account A tax-smart way to give to charity Invest charitable assets for potential growth Support your favorite charities now or over timeLearn more at schwabcharitable.orgor call 855-966-3764Schwab Charitable is the name used for the combined programs and services of Schwab Charitable Fund, an independentnonprofit organization. Schwab Charitable Fund has entered into service agreements with certain affiliates of The Charles Schwab Corporation.Schwab Charitable Fund is recognized as a tax-exempt public charity as described in Sections 501(c)(3), 509(a)(1), and 170(b)(1)(A)(vi) of the Internal RevenueCode. Contributions made to Schwab Charitable Fund are considered an irrevocable gift and are not refundable. Please be aware that Schwab Charitable hasexclusive legal control over the assets you have contributed.A donor’s ability to claim itemized deductions is subject to a variety of limitations depending on the donor’s specific tax situation. 2021 Schwab Charitable Fund. All rights reserved. (0820-09GX)SCH20 057918 OnInvest Onward 7 9375x10 25 1 7.indd 11/7/21 2:28 PM

B Y CAR R I E SCHWAB - POM E RANT ZQLong-TermCare InsuranceDear Carrie,Dear Reader,I’m 50 years old and startingto plan for retirement. One ofmy biggest stumbling blocks iswhether to purchase long-termcare insurance. Do you think it’sworth the cost?This is a great question because itapplies to millions of Americans whoare approaching their retirement years.At the heart of the issue is the fact thatlong-term care (LTC) costs can be quiteexpensive but so can LTC insurance.Add to that the uncertainty of whetheryou’ll actually need it, when to buy it,I L LU S T R AT I O N B Y M A R I A H E R G U E TAIs it right for you?ASPRING 2021 ON INVESTING 11

A S K CA R R I Ehow much coverage you might need,and what type of policy to purchase,and you’ve got some tough decisionsto make.Here are a few important questionsto ask yourself as you evaluate whetherLTC insurance is right for you.about the emotional and financial tollsuch caregiving could take on yourloved ones—even if they’re willing tohelp. In fact, that’s why many peoplechoose to purchase insurance.Will I need long-term care?It’s hard to know for certain whetheryou’ll need long-term care—assistancewith daily activities such as bathing,dressing, and eating for people experiencing physical or cognitive decline—but statistics suggest most of us will.According to LongTermCare.gov,about 70% of people ages 65 and olderwill need long-term care at some timein their lives—women more so thanmen (79% vs. 58%, respectively). Forsome, this care might be required onlyfor a few months, but others may needit for several years or longer.As with most types of insurance, thecost of an LTC policy will vary depending on the type, amount, and length ofcoverage you choose, as well as yourage, gender, and overall health. Thatsaid, if you’re considering purchasinga policy, make sure the premiumsfit your budget. Generally speaking,payments shouldn’t exceed 7% of yourmonthly expenses.The American Association for LongTerm Care Insurance (AALTCI) offersresources to help you research andcompare LTC insurance at aaltci.org/long-term-care-insurance-rates.How much does long-termcare cost?Will I qualify for LTCinsurance?Stats from the Genworth Financial2020 Cost of Care Survey are prettysobering. For instance, the currentmedian annual cost for assisted livingis 51,600; an in-home health aide is 54,912; and a private room in a nursing home is 105,850.However, costs where you live couldbe much higher or lower than thoseaverages. In California, for example,the average cost of a private room ina nursing home is 137,240; in Texas,it’s 76,650. And these figures are estimated to increase 2% to 3% annuallyon top of inflation, so the cost you maypay if you do eventually need care islikely to be much higher.Even if you can afford an LTC policy, you may not qualify. Unlikehealth insurance, preexisting healthconditions—such as a progressiveneurological condition or a recentstroke—can affect your eligibilityfor LTC insurance. According to theAALTCI, roughly half of applicantsages 75 or older were denied coveragein 2019, compared with about a thirdof those ages 65 to 69.How much can I rely onfamily support?The vast majority—80%—of long-termcare is provided at home by unpaidfamily members and friends. Butbefore you rely on this option, thinkNEXTSTEPSRead more insights about real-world moneymatters at schwab.com/askcarrie.12 C H A R L E S S C H WA B SPRING 2021How much does LTCinsurance cost?At what age should I considerLTC insurance?The need for long-term care may arisesuddenly, such as after a heart attack,hip fracture, or stroke. Most often,however, it develops gradually, aspeople get older and frailer or as anillness or disability gets worse. MostLTC claims begin when people are intheir 80s.Because of that, somewhere bet ween ages 50 and 65 is generally themost cost-effective time to buy. Theyounger you are, the lower the cost—but if you purchase too early, you’ll bepaying premiums for a longer periodof time. On the flip side, premiums goup the older and less healthy you are,and there’s a chance you’ll be deniedcoverage if your health deteriorates oryou develop a certain illness.Explore your optionsThere’s really no way around it—thedecision to purchase LTC insurance iscomplicated. Hopefully the answersto these questions can get you started.Talk to an insurance agent as youexplore options, features, and potential costs among different policiesand carriers. If LTC insurance isn’t anoption, a financial planner can helpyou strategize alternatives and assessthe potential impact to your financesand estate plan if you are counting oncovering LTC costs out of pocket. nWhat about Medicaidand Medicare?Households that qualify for Medicaidmay have access to LTC support.That said, Medicaid was designed toassist people who are at or very nearpoverty levels, meaning most middleincome and affluent individualswon’t qualify.As for Medicare, it will pay only formedically necessary skilled nursingand home care, such as giving shots,physical therapy, and changingdressings—not custodial care likebathing and eating.Carrie Schwab-Pomerantz(@carrieschwab), CFP , is president ofCharles Schwab Foundation and senior vicepresident of Schwab Community Servicesat Charles Schwab & Co., Inc.See page 38 for important information. The information provided here is for generalinformational purposes only and should not be considered an individualized recommendationor personalized investment advice. Where specifi

On Investing (ISSN 1523-5327) is published quarterly. This publication is mailed at Standard A postal rates. 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