{"id":17506,"date":"2024-12-17T05:13:13","date_gmt":"2024-12-17T13:13:13","guid":{"rendered":"https:\/\/canary.kcprod.info/blog\/?p=17506"},"modified":"2025-10-06T08:48:43","modified_gmt":"2025-10-06T15:48:43","slug":"introducing-sp500-direct","status":"publish","type":"post","link":"https:\/\/canary.kcprod.info/blog\/introducing-sp500-direct\/","title":{"rendered":"Meet Wealthfront\u2019s S&P 500 Direct: A New Way to Invest In the S&P 500\u00ae and Save On Taxes"},"content":{"rendered":"\n

Note: On June 10, 2025 we lowered the minimum for Wealthfront\u2019s S&P 500 Direct from $20,000 to $5,000. This post has been updated to reflect this update.<\/em> On October 6, 2025, we launched Nasdaq-100 Direct, which is designed to offer similar performance to a Nasdaq-100<\/em>\u00ae ETF plus valuable tax savings. You can read more <\/em>here<\/em><\/a>.<\/em><\/p>\n\n\n\n

The S&P 500\u00ae index, which consists of the largest companies driving the US stock market, represents a benchmark of success for many investors\u2014and it has delivered an average annualized return of 10.26% since its 1957 inception through the end of 2023. The index is so popular that it is the basis for the three largest ETFs by assets under management<\/a>.<\/p>\n\n\n\n

S&P 500\u00ae ETFs are a perennial investor favorite, but Wealthfront has built an even better way to get exposure to this iconic index. Wealthfront\u2019s S&P 500 Direct offers similar performance to an S&P 500\u00ae ETF, plus valuable tax savings\u2014all for a 0.09% management fee. This is the same as the cost to own SPY, the most popular S&P 500\u00ae ETF. <\/strong><\/p>\n\n\n\n

Wealthfront\u2019s S&P 500 Direct can be especially valuable if you have capital gains to offset from selling company RSUs or other stock.<\/p>\n\n\n\n

How does Wealthfront\u2019s S&P 500 Direct work?<\/h2>\n\n\n\n

S&P 500 Direct works by directly holding many of the individual stocks that make up the S&P 500\u00ae index in your Wealthfront account, hence its name. It then applies Wealthfront\u2019s automated Tax-Loss Harvesting, which turns losses into future tax savings. The minimum investment to get started with S&P 500 Direct is $5,000\u2014but the more you invest, the more individual stocks you will hold and the more opportunities our software will have to harvest losses on your behalf. You can learn more about the portfolio composition and strategy in our white paper<\/a>.<\/p>\n\n\n\n

Tax-loss harvesting is a strategy long favored by wealthy and institutional investors that involves selling investments that have declined in value, \u201charvesting\u201d the loss, and then buying a similar investment to ensure a portfolio maintains its strategy, including appropriate levels of expected risk and return. For example, even if the S&P 500\u00ae were to increase in value by 1% on a given day, Coca-Cola may drop in value because it missed its earnings guidance. With tax-loss harvesting you could sell Coca-Cola and then use the proceeds to temporarily buy a similar dollar amount of PepsiCo. The loss you take on Coca-Cola can then be used to offset taxable gains.<\/p>\n\n\n\n

You can use harvested losses to offset capital gains (like gains from stock you have sold) as well as up to $3,000 of ordinary income (like the money you earn from your paycheck). Can\u2019t use all of your losses this year? No problem. Any unused losses carry over indefinitely to future years.<\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

S&P 500 Direct\u2019s ability to conduct tax-loss harvesting using individual stocks within an index constitutes a major advantage relative to investing in an ETF like SPY. That\u2019s because ETFs are prevented by the Internal Revenue Code and the Investment Company Act of 1940 from passing on tax losses to investors. <\/p>\n\n\n\n

S&P 500 Direct, similar to an ETF that tracks the S&P 500\u00ae, is designed to minimize performance difference from that of the index\u2014this is known as \u201ctracking difference.\u201d This happens because S&P 500 Direct portfolios will generally not hold all of the stocks in the index (this is especially true of smaller accounts), and Tax-Loss Harvesting can also cause small, temporary weight deviations for certain stocks. Tracking difference in your S&P 500 Direct could be positive or negative.<\/p>\n\n\n\n

Tax benefits of S&P 500 Direct <\/strong><\/h2>\n\n\n\n

To understand the potential tax benefits of S&P 500 Direct, we think it\u2019s helpful to look at the Tax-Loss Harvesting results of our US Direct Indexing<\/a> product, which uses the same Tax-Loss Harvesting methodology and software as S&P 500 Direct and applies it to a similar large cap index. We calculate \u201charvesting yield\u201d by taking daily losses and dividing them by daily balances, aggregated over a given period.<\/p>\n\n\n\n

Our S&P 500 Direct white paper<\/a> provides analysis related to the harvesting yield for our US Direct Indexing product. In this analysis, we estimate the economic benefit of harvested losses, assuming there are short-term losses or ordinary income to offset. The estimated economic benefit of these harvested losses, based on typical tax (marginal and combined) rates between 18% and 44%, is worth between 0.73% and 7.69% of holdings. Given that S&P 500 Direct is managed by the same methodology and software as US Direct Indexing, we believe S&P 500 Direct could offer significant value in excess of what an investor could get from just owning an S&P 500\u00ae ETF or index fund.<\/p>\n\n\n\n

Build long-term wealth on your own terms<\/h2>\n\n\n\n

As we\u2019ve said many times over the years, we believe the surest way to build long-term wealth is through passive investing, while keeping your costs low and and optimizing your after-tax returns. This is exactly what S&P 500 Direct<\/a> does\u2014it passively invests in the index, is offered for a low fee of just 0.09%, and uses our Tax-Loss Harvesting software to help you keep more of what you earn. <\/p>\n\n\n\n

S&P 500 Direct<\/a>, in combination with Wealthfront\u2019s Automated Bond Ladder<\/a>, even allows you to implement the investing strategy that legendary investor Warren Buffett said in a 2013 shareholder letter<\/a> is laid out in his will. Buffett\u2019s advice to his heirs was to invest 10% in short-term government bonds and 90% in a low-cost S&P 500\u00ae index fund. You can now get this exposure to the S&P 500\u00ae and US Treasuries at Wealthfront with the further benefit of additional tax savings.<\/p>\n\n\n\n

This new product is yet another example of how Wealthfront automates powerful investing strategies to make them easy, accessible, and inexpensive. Implementing this strategy manually on your own would be time-consuming and extremely boring. Meanwhile, direct indexing (the industry term coined by Wealthfront in 2013 for directly owning the stocks that comprise an index fund to enable tax-loss harvesting) products offered by high-end investment managers can come with hefty minimums and substantial fees. But our focus on automation allows us to offer it to you for the same fee as SPY, making it one of the lowest cost direct indexing products on the market.* We do this because we want to help you build long-term wealth on your own terms, and we\u2019re thrilled to offer you a new way to do that. 

<\/p>\n","protected":false},"excerpt":{"rendered":"

Note: On June 10, 2025 we lowered the minimum for Wealthfront\u2019s S&P 500 Direct from $20,000 to $5,000. This post has been updated to reflect this update. On October 6, 2025, we launched Nasdaq-100 Direct, which is designed to offer similar performance to a Nasdaq-100\u00ae ETF plus valuable tax savings. You can read more here. […]<\/p>\n","protected":false},"author":10000,"featured_media":17509,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1360],"tags":[],"coauthors":[2515],"class_list":["post-17506","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-product-news"],"acf":[],"yoast_head":"\nMeet Wealthfront\u2019s S&P 500 Direct: A New Way to Invest In the S&P 500\u00ae and Save On Taxes | Wealthfront<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/canary.kcprod.info/blog\/introducing-sp500-direct\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Meet Wealthfront\u2019s S&P 500 Direct: A New Way to Invest In the S&P 500\u00ae and Save On Taxes | Wealthfront\" \/>\n<meta property=\"og:description\" content=\"Note: On June 10, 2025 we lowered the minimum for Wealthfront\u2019s S&P 500 Direct from $20,000 to $5,000. 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