How to Money Ask HTM - Is Direct Indexing Worth It, Sticky Cosigning Situations, & Kiddos With Credit Or Debit #949
Feb 24, 2025
This episode tackles listener dilemmas about family finances, focusing on the challenges of co-signing loans. The hosts share insights on whether to invest in a high-fee 401k or to opt for a brokerage account instead. They also explore the concept of direct indexing, weighing its tax advantages against management costs. Plus, there's practical advice on teaching kids about finances, including managing their spending with credit or debit options. Great tips await in navigating financial responsibilities within families!
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Co-signing Pitfalls
- Avoid co-signing loans for family, as it creates a legal obligation for the debt, even if you don't receive the money.
- Prioritize open communication with family about finances to address potential issues proactively.
Prioritizing Investments
- If your 401k has high fees and no employer match, consider prioritizing other investment accounts like a Roth IRA.
- Explore options like Fidelity, Vanguard, or Schwab for low-cost investment opportunities and potentially higher returns.
Direct Indexing and Tax-Loss Harvesting
- Direct indexing mirrors index funds but uses fractional shares of individual stocks, enabling smarter tax moves during market volatility.
- Tax-loss harvesting, a key benefit of direct indexing, offsets gains with losses to reduce taxable income.