3 Ways the Rich Do Index Funds Differently

Direct indexing offers you three key advantages over index funds. Do NOT miss your chance to use a strategy the rich have used for decades. Frec Direct Indexing lets you invest in an index like the S&P 500 while saving thousands on your taxes. Start direct indexing today and get a $250 cash bonus! Sign up here: https://frec.com/app/signup?referralCode=BowTieNation

Direct indexing, a strategy used by the rich for years but just recently opened up to everyone, is an automated investing strategy where a program is used to buy all the stocks in an index. That’s different from an index fund where the fund, like the Vanguard 500 Index Fund, the VOO, owns the stocks in the index and you own shares in the fund. In direct indexing, you own those stocks directly in your account.

For regular investors, owning all those stocks has always been a problem. Just holding the stocks in the S&P 500, those 500 largest companies in the United States would cost you over a hundred thousand dollars for one share each including more than $7,000 for a single share of NVR. For an index like the Russell 3000…well, can you imagine trying to buy a share of 3000 stocks?

But innovations like fractional shares and computer-assisted trading, Main Street investors are now able to directly own an index rather than just buying shares of a fund. And while that might seem like no difference at all but it sets up three key benefits for investors over the traditional index fund approach.

Now with direct indexing, you can get those same advantages like tax loss savings, the ability to diversify a concentrated stock portfolio and customized index investing.

Sponsor Disclaimer: This video is not intended to be trading or investment advice or a recommendation that any security or investment strategy is suitable for any person. Investing involves risk, including the risk of loss. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance.

$250 bonus is subject to terms and conditions. Direct index customization is subject to limitations. https://docs.frec.com/frec-bow-tie-nation-250-bonus-promotion.pdf

The S&P 500 and S&P 500 Information Technology Indices are products of S&P Dow Jones Indices LLC and have been licensed for use by Frec Markets, Inc.

Tax savings will vary from client to client due to many factors including market conditions, tax characteristics of securities, client-imposed investment restrictions, client tax rate or status, and changes in tax regulations.

Brokerage services provided by Frec Securities LLC, member FINRA/SIPC and advisory services provided by Frec Advisers LLC, an SEC registered investment adviser, both wholly owned subsidiaries of Frec Markets, Inc.

Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through dividend stocks, investing and ways to make more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.