I’ve been reading Humble Dollar for about two years, and this is my first post. I’ve used direct indexing for about five years, and given my situation and results, I’m a strong believer. I’m 60 and retired from Corporate America 15 months ago. I’m in the highest federal tax bracket, live in a state with a relatively low flat tax, and expect to remain in the top federal bracket for the foreseeable future. My equity allocation is roughly two-thirds index funds and one-third actively managed funds (Capital Group and Dimensional), with no individual stocks outside my direct-indexing accounts. I don’t trade actively, and in a typical year, I sell funds only to rebalance in tax-deferred accounts or to harvest losses during major market pullbacks. I use direct-indexing accounts for the S&P 500 and MSCI EAFE (international). Each direct account is about 20% the size of my index-fund holdings in that area. In my experience, the direct-indexing accounts have outperformed the underlying indexes by about 40–50 basis points per year, net of incremental costs, even after five years. It’s essentially hands-off on my end...trades are executed automatically. If I transfer new money into an account it is invested the next trading day with no effort from my side. I track everything daily in Quicken, and dividends post almost daily and once or twice a month there’s a batch of tax-loss sales and reinvestments. Doing this manually in spreadsheets would be overwhelming. And the first 1099 you receive for a direct-indexing account can be eye-opening—mine was more than 150 pages. This approach isn’t for everyone, but it’s been a good fit for me. I’ll keep monitoring whether the advantage fades over time, but so far it hasn’t in the current market environment.
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I’ve been reading Humble Dollar for about two years, and this is my first post. I’ve used direct indexing for about five years, and given my situation and results, I’m a strong believer. I’m 60 and retired from Corporate America 15 months ago. I’m in the highest federal tax bracket, live in a state with a relatively low flat tax, and expect to remain in the top federal bracket for the foreseeable future. My equity allocation is roughly two-thirds index funds and one-third actively managed funds (Capital Group and Dimensional), with no individual stocks outside my direct-indexing accounts. I don’t trade actively, and in a typical year, I sell funds only to rebalance in tax-deferred accounts or to harvest losses during major market pullbacks. I use direct-indexing accounts for the S&P 500 and MSCI EAFE (international). Each direct account is about 20% the size of my index-fund holdings in that area. In my experience, the direct-indexing accounts have outperformed the underlying indexes by about 40–50 basis points per year, net of incremental costs, even after five years. It’s essentially hands-off on my end...trades are executed automatically. If I transfer new money into an account it is invested the next trading day with no effort from my side. I track everything daily in Quicken, and dividends post almost daily and once or twice a month there’s a batch of tax-loss sales and reinvestments. Doing this manually in spreadsheets would be overwhelming. And the first 1099 you receive for a direct-indexing account can be eye-opening—mine was more than 150 pages. This approach isn’t for everyone, but it’s been a good fit for me. I’ll keep monitoring whether the advantage fades over time, but so far it hasn’t in the current market environment.
Post: Direct Indexing Anyone?
Link to comment from May 11, 2026