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One thing I've always wondered about products like this: how is the portability between platforms? For example, if double.finance shuts down, are there other p
by xur17 2y ago
One thing I've always wondered about products like this: how is the portability between platforms?
For example, if double.finance shuts down, are there other platforms that I can transfer my assets to inkind that will maintain the index fund tracking for me moving forward? I realize I can use ACATS to transfer the assets, but I want index tracking as well.
- ac29 2y agoThere are a number of companies offering direct indexing, but you'd need to research them individually to see how they supported transferring in assets in kind. Ideally any direct indexing would be done in tax advantaged account so if you needed to liquidate your positions and start over from cash there are no tax implications. Otherwise, be prepared to eventually deal with hundreds of individual positions each composed of numerous tax lots.
- xur17 2y ago> Ideally any direct indexing would be done in tax advantaged account A lot of the benefit of direct indexing comes from the ability to tax loss harvest, which requires it not to be in a tax advantaged account.
- ac29 2y agoJust keep in mind that tax loss harvesting is a tax deferral method. It reduces your current taxes by increasing your future taxes (which will be at an unknowable rate). It is also only effective when an account is relatively young, or if new contributions are a substantial portion of the portfolio. As your portfolio matures, fewer and fewer positions will be at a loss, so there will be only very limited opportunities to loss harvest.
- xur17 2y agoDefinitely a good point, and one of the reasons I have historically avoided services that offer tax loss harvesting. They get you in the door with solid tax losses for the first few years, and then just as the tax losses start to dissappear, you realize you own 500 different securities, and switching anywhere else is basically impossible. Double has low fees, so if there is also a way to port out and still maintain the tracking via another service, it starts to become interesting.
- loeg 2y agoTLH works best during downturns. Pre-downturn contributions are harvestable. Once you have enough to cover your maximum tax claim ($3000/year) further losses just aren't useful. I generated a lifetime supply of capital losses from like 5 minutes of manual TLH in 2020.