It has been more than 6 months since I invested $100,000 into a Direct Index that tracks the S&P 500. I share how it went and why I decided to add another $74,000.
It shouldn't be a problem. All the data is summarized in the 1099 consolidated so you don't need to enter every transaction! That would be rough! I just received my 1099 and it is 239 pages, i'll let you know if I end up with any issues going through turbotax.
The attempt at calculating the "after-tax alpha" was my attempt to answer this very question. It includes all fees, portfolio drift, and comparison against VOO performance.
Is there any benefit to this if you're already claiming a $3,000 loss every year? If you're an index investor you shouldn't have any significant gains to offset.
In that case you could think about it from the perspective of deferring your taxes into the future.
If you are harvesting losses, when you start withdrawing, you will end up with less taxes in the direct index portfolio in the beginning (due to the losses offsetting gains).
Some of this benefit will get largely eaten up when you finish withdrawing the entire balance (unless you die and your heirs get stepped up basis).
If there were individual stocks you want to trade, I would probably exclude them from the index. The index wouldn’t be aware of your other positions and could cause issues.
Alternatively, you might be able to roll your individual positions into an index.
I don’t personally trade or hold individual securities (other than some Uber from my wife’s job).
Andre, how do you manage tax filing when the total number of transactions exceeds 10,000?
It shouldn't be a problem. All the data is summarized in the 1099 consolidated so you don't need to enter every transaction! That would be rough! I just received my 1099 and it is 239 pages, i'll let you know if I end up with any issues going through turbotax.
Andre, I didn't see this clearly, but if you had invested in the same index as a baseline outside of Frec, is it still ROI positive net of fees (1%?)
I know you excluded uber so it's not very apples to apples. But the goal is always +positive gains in comparison to baseline inclusive of all fees.
The fee is 0.1% not 1%!!
The attempt at calculating the "after-tax alpha" was my attempt to answer this very question. It includes all fees, portfolio drift, and comparison against VOO performance.
Is there any benefit to this if you're already claiming a $3,000 loss every year? If you're an index investor you shouldn't have any significant gains to offset.
In that case you could think about it from the perspective of deferring your taxes into the future.
If you are harvesting losses, when you start withdrawing, you will end up with less taxes in the direct index portfolio in the beginning (due to the losses offsetting gains).
Some of this benefit will get largely eaten up when you finish withdrawing the entire balance (unless you die and your heirs get stepped up basis).
Having Frec tracking Total Index, would that now mean you can't trade all those individual stocks on other trading platforms/accounts?
If there were individual stocks you want to trade, I would probably exclude them from the index. The index wouldn’t be aware of your other positions and could cause issues.
Alternatively, you might be able to roll your individual positions into an index.
I don’t personally trade or hold individual securities (other than some Uber from my wife’s job).