top of page
  • Writer's picture Treavor Dodsworth CFP®, CPA, CKA®

#162 - Three Benefits of Direct Indexing


Three Benefits to Direct Indexing

An advancement that continues to gain traction in the investment world is direct indexing. Many of you own ETFs and Mutual Funds in your investment accounts. These may represent/own 1,000+ or even 10,000+ individual stocks. With direct indexing instead of buying ETFs or Mutual Funds, you utilize technology to buy the stocks directly. There are several advantages to this:

  1. Tax benefits. Owning the stocks directly will give more opportunities to give long-term appreciated securities and/or do tax loss harvesting than owning a Mutual Fund that owns the stocks.

  2. Ethical investing. There may be stocks within indexes that are diametrically opposed to what you value or believe. Many direct indexing technologies allow you to exclude specific stocks.

  3. Voting. When you own stock of a company, you own part of that company. That means you may have the opportunity to vote on some decisions that the company is making (oftentimes via proxy). In this way, you are actually using your influence as an owner to bring about positive change.

Technologies keep advancing in this space. This past week I looked at two options for this. Let me know your thoughts!

 

  • While it is tempting to shift to a US biased portfolio, I am generally a proponent of having global diversification.

  • I originally saw this on chartr. The tooth fairy is now paying an average of $6.23 in the U.S. What a time to be a kid!

  • Bob and Leslie Doll share how they approach giving even when they don’t always agree.

 

Thank you for reading!


Images from Pexels: photographer Liza Summer

Thanks! Message sent.

All written content on this website is for information purposes only. Opinions expressed herein are solely those of Sycomore Financial, unless otherwise specifically cited.  Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. The owner of this website takes great care to thoroughly research the information provided to ensure that it is accurate and current. Nonetheless, the content on this website is not intended to provide tax, legal, accounting, financial, or professional advice, and readers are advised to seek out qualified professionals that provide advice on these issues. All information or ideas provided should be discussed in detail with an advisor, accountant, legal counsel, and/or other pertinent professionals prior to implementation. In addition, the owner cannot guarantee that the information on this website has not been outdated or otherwise rendered incorrect by subsequent new research, legislation, or other changes in law or binding guidance. Neither Sycomore Financial or it's owner shall have any liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website. In addition, any advice, articles, or commentary included on this website do not constitute a tax opinion and are not intended or written to be used, nor can they be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Any mention of an investment product or solution is not a recommendation to buy or sell. ETFs that are mentioned may not accurately reflect the market segment mentioned. Past performance is not a guarantee of future results. Any mention of rates or return should not be seen as a guarantee those rates or return will be received.

​

bottom of page