What is direct indexing?

Direct indexing is an investment strategy where you buy the individual stocks that make up an index or ETF instead of buying the fund itself. This eliminates the fund's annual expense ratio and gives you full control over which stocks you hold, enabling tax-loss harvesting and portfolio customization.

Is direct indexing better than ETFs?

It depends on your situation. Direct indexing is better if you have $25K+ invested, pay more than 0.20%/yr in ETF fees, want tax-loss harvesting, or need portfolio customization. ETFs are better for smaller portfolios, ultra-low-cost funds like VTI (0.03%), or investors who prefer zero maintenance.

How much does ETF expense ratio cost over time?

ETF fees compound against you over time. On a $100,000 portfolio at 7% annual growth, a 0.40% expense ratio costs over $81,000 in lost returns over 30 years. Even a 0.09% fee (SPY) costs about $19,000 over the same period. Direct indexing eliminates this cost entirely.

What is tax-loss harvesting and how does it work?

Tax-loss harvesting is selling investments at a loss to offset capital gains taxes. With direct indexing, you own stocks individually, so you can sell losers to harvest losses while keeping winners. ETF holders cannot do this because they own one bundled security. High-income investors in taxable accounts benefit most.

Who is direct indexing suitable for?

Direct indexing is best suited for investors with $25,000 or more in taxable brokerage accounts, those paying 0.20%+ in ETF expense ratios, high-income earners who benefit from tax-loss harvesting, and anyone who wants to exclude or overweight specific stocks for personal or ESG reasons.

What is the difference between an index fund and direct indexing?

An index fund (ETF or mutual fund) pools investor money to buy all stocks in an index, charging an annual expense ratio. Direct indexing means you buy the individual stocks yourself, paying no ongoing fees. You get similar market exposure but with added benefits: zero expense ratio, tax-loss harvesting on individual positions, and full control to customize holdings.

← All ETFs

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VTI — Vanguard Total Stock Market ETF

Tracks the entire US stock market — large, mid, and small cap.

Expense ratio: 0.03%/yr

SPY QQQ VTI VXUS SCHD ITA XLV XLE HACK

Holdings

Ticker	Company	Sector	ETF Weight %
AAPL	Apple	Technology	6.80%
MSFT	Microsoft	Technology	5.90%
NVDA	NVIDIA	Technology	5.50%
AMZN	Amazon	Consumer	3.40%
META	Meta Platforms	Technology	2.40%
GOOGL	Alphabet A	Technology	2.00%
GOOG	Alphabet C	Technology	1.70%
BRK.B	Berkshire Hathaway	Financials	1.60%
LLY	Eli Lilly	Healthcare	1.50%
AVGO	Broadcom	Technology	1.40%
JPM	JPMorgan Chase	Financials	1.30%
TSLA	Tesla	Consumer	1.20%
UNH	UnitedHealth	Healthcare	1.10%
V	Visa	Financials	1.00%
XOM	ExxonMobil	Energy	0.90%

Basket Stats

Coverage100%

Est. R²0.990

✅ 15 stocks — good tracking (R² target met)

Portfolio size ($)

Annual savings$15

10-yr compounded$275

20-yr compounded$1,082

Buy List — $50,000 portfolio

Ticker	Company	Allocation %	Buy Amount
AAPL	Apple	18.0%	$9,019
MSFT	Microsoft	15.6%	$7,825
NVDA	NVIDIA	14.6%	$7,294
AMZN	Amazon	9.0%	$4,509
META	Meta Platforms	6.4%	$3,183
GOOGL	Alphabet A	5.3%	$2,653
GOOG	Alphabet C	4.5%	$2,255
BRK.B	Berkshire Hathaway	4.2%	$2,122
LLY	Eli Lilly	4.0%	$1,989
AVGO	Broadcom	3.7%	$1,857
JPM	JPMorgan Chase	3.4%	$1,724
TSLA	Tesla	3.2%	$1,592
UNH	UnitedHealth	2.9%	$1,459
V	Visa	2.7%	$1,326
XOM	ExxonMobil	2.4%	$1,194
Total			$50,000

💡 Use fractional shares at brokers like Fidelity, Schwab, or Interactive Brokers to hit these exact allocations.