What is Direct Indexing?

Generally, Rachelle and Corey are big fans of keeping things simple on Financial Clarity for Doctors.  But in some situations, a little more complicated can be a lot more helpful!  For those in higher tax brackets, direct indexing can be a more tax efficient way to invest in the broader market than using mutual funds or ETFs.  In this episode of Financial Clarity for Doctors, learn a little more about it.

In this episode, learn:

• How indexes are a measure of the performance of lots of different companies in a particular category.
• How mutual funds and ETFs are designed to mirror that performance.
• The difference between investing in an index fund and direct indexing.
  • The index fund realizes gains and losses when it places trades to be more in line with the performance of the underlying index.
  • With direct indexing, you can choose if/when/what to buy and sell to minimize capital gains.
• The benefits of index investing and direct indexing.

This strategy may be more complicated than many people need in their financial plan, but can make a big difference in when and how you pay capital gains taxes, especially in large accounts.  If you have a large sum of money to invest in a brokerage account, definitely something to learn more about and consider.

For more financial planning tips from Corey and Rachelle, find them on social media!
LinkedIn: @CoreyJanoff and @RachelleVanderzanden; Instagram: @CoreyJanoff and @VanderzandenRachelle; and Twitter: @CoreyJanoffCFP and @RachelleFinance 

Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Finity Group, LLC and Cambridge are not affiliated. Cambridge does not offer tax or legal advice.