Thanks a ton Rob. This video, and your video on leaving your advisor was exactly what I was looking for. We try to keep our capital gains to a minimum, and last year I was "encouraged" to drop 250k into a Fidelity Managed fund that would help allow for "some tax loss harvesting". While it was in line with my questions/concerns about mutual funds that were throwing off gains, in retrospect I sensed my Fidelity advisor was just selling a product as quickly as possible. That feeling was reinforced when she bristled after I questioned its performance and utility in our annual review meeting. Now that we have let it run for a year, I'm taking a closer look at unwinding that account and your points are exactly what I needed to better understand. Thank you! While I will soon have a grab bag of stocks I'll need to unwind, it will be a good set of lessons. Your videos have helped me/us re-think many years of managed finances and reinforced my skepticism of active fiscal management in general (for me). Thanks again for your content and I'm looking forward to starting your book when it arrives tomorrow.
3rd on the distraction of slight audio static and faint baby crib music. Minor distraction but many like me listen through amplified speakers and audio defects are bothersome. Really appreciate the work you put into content, thank you. Your my favorite financial content provider keep up.
I currently have this in my portfolio. It’s been tracking the S&P well. It’s however very hard to see how much losses it has harvested. And it’s very hard to find any information about roughly how much money this has saved people in the real world. I asked my broker for data but they just sent me over some PDF with a bunch of blabla - so I’m basically testing this because I’m curious and I believe in the math behind it, I’m also in the highest tax bracket and make monthly contributions to it. Hopefully there will be some more real data out there for people with lesser financial knowledge to learn from in the future! Good luck :)
Thanks for the DI review Rob. The background music or the music choice doesn't work well with this style of speaking, though I do greatly appreciate the lack of stuttering in this well prepared video.
Another excellent video Rob! I have recently been contemplating this exact decision, and was wary for the same reasons you pointed out. Perhaps other folks did a fair amount of tax loss harvesting this past year on their own - for example using VOO and VTI - which would further pushes out the benefit of adding more losses to a pool of existing yet-to-be used capital losses. Appreciate your casual, common-sense style in breaking down these topics which can seem complex at first blush. 👍
41% combined marginal rax rate (35% fed + 6% state) with $200k in a brokerage account and adding about $20k annually. I do both DI and TLH as they are no extra cost at my brokerage.
Great video. I started one with Fidelity this year. I think the key is to always be contributing to the account. I have large quarterly capital gains from my employer stock and use it to diversify while offsetting some of those gains.
I don't understand how you have large quarterly capital gains from employer stock. What option do you have selected? If you have "Sell all" then no capital gains should incur since you sell as soon as the stocks get vested. The only time you'll have capital gains/loss to report would be if you use "Sell to cover" option and then you manually sell the remaining stocks.
Rob, Thank you for doing what you do. I'm grateful there are people like you out there putting this kind of information out there. Very... very informative.
I am a US expat living in Europe. EU regulations prevent me from buying US ETFs and UCITS equivalents that Europeans typically buy are a nonstarter because of PFIC rules from the IRS. I am wondering how hard it would be to implement a direct index approach to get around this catch 22 without focusing on Tax Loss Harvesting. Isn't it the same in the end to just tolerate the capital gains every time you rebalance?
Thank you for providing a common-sense, simple explanation of this mechanism. We were considering in investing in this type of program, and much of the available content is from financial institutions trying to sell their product (biased). You earned a newsletter subscriber out of me today.
Rob. Would you do a video on looking at financial statements and find possible financial malfeasance? With your legal background this might really be worthwhile
Rob, one of the big brokerages have continued to push this on me. When they said they would sell all my investments and create the direct index, I immediately said no. Thanks for an easy to understand video on this.
Unless you are comparing Berkshire Hathaway stock to the S&P 500 over the last 10 or 20 years, then you will see one part is greater than the sum of it’s parts
Why would short term cap gains from other sources re-energize savings? Doesn't the index get tax advantages or not, independent of extraneous investments?
i don't think the music is terrible. At least its soft enough that I can hear the content. Some videos have music so loud I can't hear the voice-over. I am listening on a laptop through its speakers, not external speakers. I also brought it up on the TV and got the same experience. I take no offense to the music. Do I like it? Not really, but I don't hate it.
As others have said, I really like the topic and you do a good job of of covering it but I don't love the background music and it feels a little over produced. Your normal format works better I think....
What about equity exchange fund? It does help diversify the concentrated positions. However, it just defers the capital gains tax. Not sure if it is worth the cost.
Thanks for your useful info, as always. I have one question: for someone like with with major carry over capital loss, I guess direct indexing and the subsequent tax loss harvesting could be more valuable, right? If my goal is to use up that carry over asap
Oh @Rob Berger . . . I was such a fan of your videos. They used to be natural, comfortable and relatable, and nothing like the manic, rushed, hard-cut edited videos of the "get-rich-quick" 'content creators.' Now, with the hard-cuts and background music, and you (clearly) reading from a script, they have suffered. I guess someone convinced you to "up-your-UA-cam-game." I hope the Live Q&As don't change . . . . : - (
Thanks Rob for the great video. One of the main reasons that I've looked into direct indexing is indeed for the ESG side because there are a handful of companies that I would prefer to not invest in (for example Phillip Morris in the S&P500). The hassle to remove them though ends up being pretty high. What I ended up doing is using an ETF screener to find ESG screened ETFs which removed the companies I wanted and were still low expense ratio, and then I just went through the list of companies they excluded and directly invested in the handful that I wanted to add back in, based on their percentage in the underlying index. This hybrid approach lets me build effectively my own screened S&P 500 portfolio using only a handful of positions. .
Fidelity charges a flat monthly fee for their Folio/Basket "direct indexing" feature. If you are self-managing your account, the fee is only $4.95/month. Do you think that fee is reasonable? or too high?
Thanks for the feedback. I hear no static when I play it and audio levels are good. Curious if others are hearing static. I do have a sound track in the background (and effect many UA-cam videos use), but it's set to a -45 db. I wonder if that's what you're hearing.
Yes, I also hear static/white noise whenever Rob is speaking. I don't mind the background music, but the "fuzzy" speech makes this really hard to listen to.
@Rob for someone who's in tech where roughly 45% of my salary comes in RSUS where I get taxed (sell to cover) on vest whether I sell the rest or not, does DI make sense? What should one do with the proceeds from the RSU? Sell them all or re-invest into index funds? Ticker is SQ
Your RSUs are no different than a bonus. Your company has given you a bonus with the value that has not been fixed. However, when rsu vests, it is treated as earned income, so you will pay taxes whether you keep it or not. So, once you think about them the right way, you realize you should sell them immediately as soon as you can, and do whatever you need to, such as buying index funds, paying off debts, with the resulting proceeds.
Would it be approved by you to invest in taxable Wealthfront fund direct indexing with tax harvesting as my main investment vehicle, as a joint account with my spouse? Reason being as your example I trade options in an outside brokerage with a smaller chunk of money and incur extra short term capital gains. Thanks.
Making your decision based primarily on the tax impact is the tail wagging the dog. A poor investment is a poor investment regardless of the implications.
I don't work them, I'm only a customer and get nothing by posting this comment. What do you think about wealthfront, that does this for you for "free"? (I put the free in quotes because nothing is actually free)
What possible benefit is derived from choosing companies to invest in based on their adherence to anything other than giving the best $ on that investment? ESG is not going to hold and Larry Fink will eventually lose this battle.
I liked the old style of videos much better. No cuts, raw talk, and especially no background music!
Appreciate the feedback.
I agree with no background music, but I otherwise really liked this format and length. Thanks Rob!
I love how you make things simple.
Thanks a ton Rob. This video, and your video on leaving your advisor was exactly what I was looking for. We try to keep our capital gains to a minimum, and last year I was "encouraged" to drop 250k into a Fidelity Managed fund that would help allow for "some tax loss harvesting". While it was in line with my questions/concerns about mutual funds that were throwing off gains, in retrospect I sensed my Fidelity advisor was just selling a product as quickly as possible. That feeling was reinforced when she bristled after I questioned its performance and utility in our annual review meeting. Now that we have let it run for a year, I'm taking a closer look at unwinding that account and your points are exactly what I needed to better understand. Thank you! While I will soon have a grab bag of stocks I'll need to unwind, it will be a good set of lessons. Your videos have helped me/us re-think many years of managed finances and reinforced my skepticism of active fiscal management in general (for me). Thanks again for your content and I'm looking forward to starting your book when it arrives tomorrow.
Like the new positioning of the desk
3rd on the distraction of slight audio static and faint baby crib music. Minor distraction but many like me listen through amplified speakers and audio defects are bothersome. Really appreciate the work you put into content, thank you. Your my favorite financial content provider keep up.
I currently have this in my portfolio. It’s been tracking the S&P well. It’s however very hard to see how much losses it has harvested. And it’s very hard to find any information about roughly how much money this has saved people in the real world. I asked my broker for data but they just sent me over some PDF with a bunch of blabla - so I’m basically testing this because I’m curious and I believe in the math behind it, I’m also in the highest tax bracket and make monthly contributions to it. Hopefully there will be some more real data out there for people with lesser financial knowledge to learn from in the future! Good luck :)
I agree, .. its very hard to focus on the message with that background music
Thank you. I liked this because it was clear and straightforward. I became a subscriber.
Great content once again, plus I've noticed the added graphics you did in this video! Very nice!
Elevator background music... hmm.. don't like. Doesn't even cover up the slight humming in the audio.
Background music is evil. I can’t focus on what he is saying.
Me neither hard to hear what he is saying. I muted the sound and snd turned on the captions
Agreed. Great video otherwise.
Thanks for the DI review Rob. The background music or the music choice doesn't work well with this style of speaking, though I do greatly appreciate the lack of stuttering in this well prepared video.
DI also benefits those who plan to die with a large portfolio and give to an heir because of step-up in basis. Similar benefit to gifting to charity.
Another excellent video Rob! I have recently been contemplating this exact decision, and was wary for the same reasons you pointed out. Perhaps other folks did a fair amount of tax loss harvesting this past year on their own - for example using VOO and VTI - which would further pushes out the benefit of adding more losses to a pool of existing yet-to-be used capital losses. Appreciate your casual, common-sense style in breaking down these topics which can seem complex at first blush. 👍
41% combined marginal rax rate (35% fed + 6% state) with $200k in a brokerage account and adding about $20k annually. I do both DI and TLH as they are no extra cost at my brokerage.
First LIke! Another great and understandable analysis for us Rob! Thanks!
Great video. I started one with Fidelity this year. I think the key is to always be contributing to the account. I have large quarterly capital gains from my employer stock and use it to diversify while offsetting some of those gains.
I don't understand how you have large quarterly capital gains from employer stock. What option do you have selected? If you have "Sell all" then no capital gains should incur since you sell as soon as the stocks get vested. The only time you'll have capital gains/loss to report would be if you use "Sell to cover" option and then you manually sell the remaining stocks.
Never heard of this, thanks for educating me!
Rob, Thank you for doing what you do. I'm grateful there are people like you out there putting this kind of information out there. Very... very informative.
Thank you for these videos. Your knowledge and clarity is really excellent. One small suggestion: can you not include music in the background?
Very good and interesting topic. Background music.... 👎. The writing editing is awesome! Great job!
I am a US expat living in Europe. EU regulations prevent me from buying US ETFs and UCITS equivalents that Europeans typically buy are a nonstarter because of PFIC rules from the IRS. I am wondering how hard it would be to implement a direct index approach to get around this catch 22 without focusing on Tax Loss Harvesting. Isn't it the same in the end to just tolerate the capital gains every time you rebalance?
Thank you for providing a common-sense, simple explanation of this mechanism. We were considering in investing in this type of program, and much of the available content is from financial institutions trying to sell their product (biased). You earned a newsletter subscriber out of me today.
My retail brokerage account has one company in each of the 11 sectors - my own personal mutual index fund and I DCA on a monthly basis - buy and hold
I love your videos but I have to skip this one. The background music makes this unlistenable. I can’t focus on what you are saying. 😢
Thanks for the feedback. Was trying something new, but the response has been clear--no more background music!
Rob. Would you do a video on looking at financial statements and find possible financial malfeasance? With your legal background this might really be worthwhile
It's a great topic, but very heard to condense into one video. Let me give it some thought.
Thank you
Rob, one of the big brokerages have continued to push this on me. When they said they would sell all my investments and create the direct index, I immediately said no. Thanks for an easy to understand video on this.
Unless you are comparing Berkshire Hathaway stock to the S&P 500 over the last 10 or 20 years, then you will see one part is greater than the sum of it’s parts
I'd like to get your thoughts on tax loss harvesting in general and using ETFs/mutual funds - separate from the direct investing question.
I would like a video on this as well. Thank you for all your great videos!
why did you choose compound daily instead of annually? i thought we all talk about annualized return, thanks.
Why would short term cap gains from other sources re-energize savings? Doesn't the index get tax advantages or not, independent of extraneous investments?
i don't think the music is terrible. At least its soft enough that I can hear the content. Some videos have music so loud I can't hear the voice-over. I am listening on a laptop through its speakers, not external speakers. I also brought it up on the TV and got the same experience. I take no offense to the music. Do I like it? Not really, but I don't hate it.
As others have said, I really like the topic and you do a good job of of covering it but I don't love the background music and it feels a little over produced. Your normal format works better I think....
Noted!
What about equity exchange fund? It does help diversify the concentrated positions. However, it just defers the capital gains tax. Not sure if it is worth the cost.
Thanks for your useful info, as always. I have one question: for someone like with with major carry over capital loss, I guess direct indexing and the subsequent tax loss harvesting could be more valuable, right? If my goal is to use up that carry over asap
This sounds like a lot of work. I’ll stick with DCA into index etf’s
Oh @Rob Berger . . . I was such a fan of your videos.
They used to be natural, comfortable and relatable, and nothing like the manic, rushed, hard-cut edited videos of the "get-rich-quick" 'content creators.'
Now, with the hard-cuts and background music, and you (clearly) reading from a script, they have suffered. I guess someone convinced you to "up-your-UA-cam-game."
I hope the Live Q&As don't change . . . .
: - (
As I've said in response to similar comments to this video, just trying an experiment. Appreciate the feedback.
How would the 5 year diminishing return timeline be impacted if the fee structure was only 10 basis points?
Thanks Rob for the great video. One of the main reasons that I've looked into direct indexing is indeed for the ESG side because there are a handful of companies that I would prefer to not invest in (for example Phillip Morris in the S&P500). The hassle to remove them though ends up being pretty high.
What I ended up doing is using an ETF screener to find ESG screened ETFs which removed the companies I wanted and were still low expense ratio, and then I just went through the list of companies they excluded and directly invested in the handful that I wanted to add back in, based on their percentage in the underlying index. This hybrid approach lets me build effectively my own screened S&P 500 portfolio using only a handful of positions. .
Fidelity charges a flat monthly fee for their Folio/Basket "direct indexing" feature. If you are self-managing your account, the fee is only $4.95/month. Do you think that fee is reasonable? or too high?
Not sure if you're still reviewing portfolios! Here's mine:
VWCE: 60%
ZPRV: 20%
EUNA: 10%
EGLN: 10%
P.S.: I'm 37
Been a year, How much did you gain, may I ask?
There's a lot of static in the background
Audio is very quiet for me too
Thanks for the feedback. I hear no static when I play it and audio levels are good. Curious if others are hearing static. I do have a sound track in the background (and effect many UA-cam videos use), but it's set to a -45 db. I wonder if that's what you're hearing.
Yes, I also hear static/white noise whenever Rob is speaking. I don't mind the background music, but the "fuzzy" speech makes this really hard to listen to.
Are there any financial advisors that have experience in simplifying a direct indexed account in a tax efficient manner?
Hard to hear you over that music
How much do contributions change your opinion
content is great, my suggestion would be to try to cut down on edits if possible, as they create tic like jerks that are distracting, thank you!
Would you know of a retirement planner similar to Capital but for Canadian? Thanks JB
hi - I got dinged and let my advisor put all my investments in DI - can you advise on how I can transition out?
@Rob for someone who's in tech where roughly 45% of my salary comes in RSUS where I get taxed (sell to cover) on vest whether I sell the rest or not, does DI make sense?
What should one do with the proceeds from the RSU? Sell them all or re-invest into index funds? Ticker is SQ
Sell and reinvest into the constituents of your predetermined asset allocation investment.
Your RSUs are no different than a bonus. Your company has given you a bonus with the value that has not been fixed. However, when rsu vests, it is treated as earned income, so you will pay taxes whether you keep it or not.
So, once you think about them the right way, you realize you should sell them immediately as soon as you can, and do whatever you need to, such as buying index funds, paying off debts, with the resulting proceeds.
Would it be approved by you to invest in taxable Wealthfront fund direct indexing with tax harvesting as my main investment vehicle, as a joint account with my spouse?
Reason being as your example I trade options in an outside brokerage with a smaller chunk of money and incur extra short term capital gains. Thanks.
Making your decision based primarily on the tax impact is the tail wagging the dog. A poor investment is a poor investment regardless of the implications.
I think we can all easily manage our own DIY direct indexing in a brokerage like M1 finance. There's no need to lose basis points over this.
Rob just said it can be complicated and time consuming, and laid out why that is.
I don't work them, I'm only a customer and get nothing by posting this comment.
What do you think about wealthfront, that does this for you for "free"?
(I put the free in quotes because nothing is actually free)
Background music is annoying and distracting.
OMG, esg.
ESG is nonsense
Too much effort... VT and done.
ESG 👀 💩
What possible benefit is derived from choosing companies to invest in based on their adherence to anything other than giving the best $ on that investment? ESG is not going to hold and Larry Fink will eventually lose this battle.