Schwab User? Here's Why You Should Consider Double

If you're currently using Charles Schwab for your investments, you might be familiar with their Personalized Indexing or Intelligent Portfolios offerings. While these services have their merits, it's worth exploring alternative platforms that might better align with your specific investment goals and preferences. This article will talk about how these offerings compare and contrast to Double, and why it might be a compelling option for you.

Key Differences: Fees, Minimums, and Investment Approach

One of the most immediate differences between Double and Schwab's Personalized Indexing lies in the fee structure and account minimums. Schwab's Personalized Indexing service charges an advisory fee ranging from 0.35% to 0.40% annually, with a substantial $100,000 minimum to open an account. In contrast, you can start investing into certain Double’s strategies with just $1,000 for only $1/month. This significantly lower barrier to entry makes Double accessible to a wider range of investors.

However, it's important to note that Schwab also offers Intelligent Portfolios, a robo-advisor service with no advisory fee. While this might seem attractive, Intelligent Portfolios are ETF-based only and tend to keep a significant portion of your portfolio in cash. This allocation to low-yielding cash can potentially impact your overall returns, especially in a rising market. Double, allows you to invest directly in individual stocks within an index, giving you more control over your asset allocation.

Why Consider Double?

Let's explore some of the features that set Double apart and might make it a worthwhile consideration for Schwab users:

1. Transparent Pricing

Double's pricing is straightforward and easy to understand. For a flat fee of $1 per month, with your first six months free, you gain access to all of Double's features, including pre-built strategies, direct indexing, tax-loss harvesting, and more. This is in contrast to Schwab's tiered pricing structure for Personalized Indexing, which can be more complex and potentially more expensive for some investors.

2. Breadth of Selection: 50+ Indexes and Growing

Double offers a diverse range of over 50 pre-built indexes, with new ones being added regularly. These indexes span various sectors, themes, and investment styles, providing ample choice for investors with different risk appetites and objectives. This wide selection allows you to easily diversify your portfolio and invest in areas that align with your interests. Some examples include:

• US Top 500: Tracks the 500 largest US companies by market capitalization.
• Semiconductors Index: Focuses on leading semi conductor index related companies.
• US Momentum Factor: Focuses on US stocks with strong 6 and 12 month price performance.

While Schwab also offers a variety of investment options, Double's focus on direct indexing and the ability to customize these indexes provides a unique level of flexibility.

3. Build Your Own Custom Strategies: Mix Active and Passive Investing

One of Double's standout features is the ability to create your own custom investment strategies using our Stock Screening tools. This allows you to blend active and passive investing approaches, tailoring your portfolio to your exact specifications. You can select individual stocks, weight them according to your preferences, and even set specific criteria for inclusion or exclusion.

For example, you could create a strategy that focuses on dividend-paying stocks in the technology sector, or one that tracks a specific market index but excludes companies with a negative 3 year growth in earnings. This level of customization is generally not available with traditional advisory services or robo-advisors like Schwab's Intelligent Portfolios.

4. Automated Tax-Loss Harvesting: Potentially Optimize Your Tax Situation

Double offers automated tax-loss harvesting (TLH) as part of its platform. This feature can potentially help you reduce your tax liability by strategically selling investments that have lost value to offset gains realized elsewhere in your portfolio. Double uses two approaches for TLH:

• Pairs-Based TLH: This involves replacing a sold asset with a similar security, maintaining your market exposure while realizing a loss for tax purposes.
• Factor-Based TLH: This more sophisticated approach identifies replacement securities that share similar underlying factors (e.g., value, growth) with the sold asset, further optimizing the tax benefits.

It's important to understand that tax-loss harvesting does not guarantee a reduction in your tax bill. The effectiveness of TLH depends on various factors, including your overall investment performance and tax situation. However, when used appropriately, it can be a valuable tool for potentially enhancing after-tax returns. Schwab's Personalized Indexing does offer tax-loss harvesting, but it is not available with their Intelligent Portfolios.

5. Dollar-Cost Average Between Strategies: Manage Risk and Adapt to Market Changes

Double allows you to implement dollar-cost averaging (DCA) not just for individual investments, but also for transitions between different strategies. DCA involves investing a fixed amount of money at regular intervals, regardless of market fluctuations. This can help to mitigate the risk of investing a large sum at an unfavorable time.

With Double, you can gradually shift your portfolio from one strategy to another over time. For instance, if you want to move from a more aggressive growth-oriented strategy to a more conservative income-focused one, you can use the DCA feature to do so in a controlled and systematic manner on a weekly or monthly basis. This feature can be particularly useful during periods of market volatility or when your investment goals evolve. Schwab does not currently offer a similar feature for transitioning between different investment strategies.

7. Safe and Trusted: Custody with Apex Clearing

Double prioritizes the security of your investments. Your assets are held by Apex Clearing, a leading clearing firm that provides custody services for numerous financial institutions. You can learn more about Double's commitment to security and their relationship with Apex Clearing in their blog post titled "Why You Should Trust Double".

While Double takes measures to ensure the safety of your assets, it's crucial to remember that all investments carry inherent risks. The value of your investments can fluctuate, and you could potentially lose money.

Comparison Table

Conclusion: A Powerful Platform for Self-Directed Investors

Double offers a compelling alternative to traditional investment platforms like Schwab, particularly for self-directed investors who value control, flexibility, and potentially tax-efficient strategies. With features like transparent pricing, a wide selection of indexes, custom strategy creation, automated tax-loss harvesting, and dollar-cost averaging between strategies, Double provides a powerful toolkit for managing your investments.