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Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

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Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#261

Post by ac29 »

xur17 wrote: post #244
ac29 wrote: post #236

Earlier quoted context omitted.

There 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 compo…

> 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.

Just 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.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#262

Post by neximo64 »

wrsh07 wrote: post #25
dayone1 wrote: post #11

1) are you going to sell your trade flow to Citadel / market makers like Robinhood and your competitors do? That's the dirty secret way of making money that you seem to have completely excluded. The reality is that adds up to substantial "invisible" fees that the investor has no transparency over because you sell your trade flows to them and they make a higher than normal spread. And the whole "doesn't matter if we s…

Pfof is woefully misunderstood In general, citadel wants to pay to trade with retail investors because it knows it isn't going to face adverse selection. So it will give them tighter bid/ask ratios (this is better for the customer) than they would get if they were trading in the open market, citadel isn't going to get hosed by one of them (because there's no adverse selection) It's win win win

Distorted incentives

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#263

Post by UncleMeat »

koolba wrote: post #230
UncleMeat wrote: post #130

Earlier quoted context omitted.

Even if there are no trading costs, 12/y gets you one modest developer salary for every 10,000 customers. How big is the addressable market here?

$1/mo x 12 months x 10,000 customers = $120,000 But that will not pay a modest developer salary. The corporate side of FICA is 7.62%. Also add in health insurance, a retirement plan, office space, a computer for the developer ... and that's just the human side. There's all the corporate costs (e.g., servers) and regulatory filings. The only play I can see with something like this is to ride it out and hope some estab…

Sure, we can quibble. If they are intending on paying competitive bay area salaries they'll be paying much more. Or maybe they can build the bulk of their engineering team in Warsaw or whatever and pay less.

I picked a number on the lower side to be generous. Whether this pays for one developer, half a developer, or a quarter of a developer doesn't fundamentally change the big problem: you need a lot of users to cover even a small team and the total addressable market here is small.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#265

Post by Etheryte »

The pricing page is not really useful and I would even go as far as to say it's misleading. You compare the returns of your service to an advisor that costs $2000 an hour. The overlap between people who pay two grand per hour to an advisor and the people who use a $1 monthly subscription investment service is an empty set. What would be much more interesting would be if you showed a comparison of your service offering vs a cheap ETF. For example, how do your fees for rebalancing, buying, selling, etc add up when tracking the equivalent of VOO for a year, as opposed to just buying VOO? Right now it looks like you're trying to hide this comparison and that sounds like it doesn't look good for you.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#266

Post by xur17 »

ac29 wrote: post #261
xur17 wrote: post #244

Earlier quoted context omitted.

> 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.

Just 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 opportunitie…

Definitely 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.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#267

Post by fairity »

There seems to already be significant competition in the low cost ETF space. For example, Schwab’s broad based s&p ETF (SCHB) has $34b AUM.

The fact that there exists a competitive market suggests that there’s a good reason expense ratios can’t drop much further than .03%. Presumably, once you reach a certain size, there are costs associated with managing a low cost etf strategy that the end investor actually wants to pay for.

What makes you think you can beat these market rates in a way that is truly accretive to investors? Put another way, what is Schwab wasting money on that you won’t?

I doubt Schwab is just being greedy with their .03% fee. It’s necessary to cover their costs.

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#268

Post by slt2021 »

1oooqooq wrote: post #249
wrsh07 wrote: post #29

Earlier quoted context omitted.

Here's the money stuff excerpt: https://marginalrevolution.com/marginalrevolution/2021/02/th... > I feel like most of what I read about payment for order flow is insane? Otherwise normal people will start out mainstream explainer articles by saying, like, “Robinhood sells your order to Citadel so Citadel can front-run it.” No! First of all, it is illegal to front-run your order, and the Securities and Exchange Commis…

it's already public that frontrunning is perfectly legal if you can do it with large volume as to not show intent of frontrunning one single person.

yeah, Citadel's annual $30,000,000,000 profit is not coming out of thin air or just from bid-ask spread. Customers are being taken for a ride definitely

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#269

Post by beryilma »

> We handle all the management, including rebalancing and tax-loss harvesting—proactively selling losing stocks to potentially save on taxes

- For a non-retirement portfolio, isn't rebalancing is a taxable event? Rebalancing by selling stocks and buying others is not the best approach. Isn't it better to rebalance by shifting the focus of new investments based on a strategy?

- I think it is misleading to present tax-loss harvesting as a way of saving on taxes. I don't know why people present it this way. In order to "save on taxes" you have to realize (i.e., sell stocks at) a loss first...

Re: Launch HN: Double (YC W24) – Index Investing with 0% Expense Ratios

#270

Post by taway789aaa6 »

jkulubya wrote: post #162
Lionga wrote: post #112

Earlier quoted context omitted.

As a market maker Citadel is allowed to do naked shorting.

A naked short on their own account would be illegal. A time-bound naked short to fulfill their role as market maker would be acceptable. But even then, all trades are either eventually settled at some time t, or fail to settle, e.g. if the seller is not good for the shares. Any of these 2 events happening is reported outside of a single broker-dealer, i.e. public info. And to settle a trade, you will need the actual…

Well we all know financial institutions never do anything illegal.

https://www.sec.gov/newsroom/press-releases/2023-192 https://www.sec.gov/newsroom/press-releases/2017-11

> But there would be so many other parties discovering it way before their annual financials are published.

Looking at Bernie Madoff I'm not sure this is really the case...

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