Direct indexing is tax-loss harvesting with more moving parts.
Single-stock harvesting can create more losses than ETF harvesting, but the value depends on tax rate, portfolio size, platform cost, and whether you can use the losses.
When direct indexing is more likely to help
- You have $500K+ in taxable equity exposure.
- You are in a high federal or state capital-gains tax bracket.
- You expect capital gains from stock sales, business sales, real estate, or K-1s.
- You need loss generation to diversify a concentrated position.
- Your advisor can monitor wash sales across the full household.
When to be cautious: low tax brackets, small taxable accounts, low expected gains, or no plan for using harvested losses.
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