Hacker News Reader

This is cool. There is a lot of hesitation to move significant assets from my Charles Schwab brokerage account. That's going to be my main hurdle. I need to understand the safety, trust, trading mechanics, flexibility that I have with Charles Schwab, all of those things become very valuable when talking about high amounts for retirement purposes. I don't really know what you can do there to attract such clients? Will anyone move $5m from their top tier brokerage to Double yet?

"Will anyone move $5m from their top tier brokerage to Double yet?"

I have!

But I understand that yes this is a hard thing to get people to move and trust, safety and trading mechanics are incredibly important. We are trying to be as transparent as possible on all those factors. I would love for you to try us out with a smaller amount first to see observe all the mechanics before making a larger move. We support full and partial ACATS transfers of existing stock positions (meaning you don't have to sell anything).

>> There is a lot of hesitation to move significant assets from my Charles Schwab brokerage account.

I'm incredibly double-minded about this. M1 offers essentially the same service and they do it very well. I've compared M1 vs Fidelity Basket Portfolio (which also offers yet almost the same service.) Here are my takes

- M1 is easy to use (mostly, though same super-strange UX choices)

- M1 is a pleasure to use

- M1 doesnt fail on the main features

- M1 Baskets of Baskets gets complicated, but understandably so.

- Fidelity is better in some ways as it allows trading anytime, not just on specific windows as M1 does (this can also be a downside for itchy fingers)

- Fidelity Basket Portfolios is broken 30% of the time. Their OWN buy function fails any time they cannot get a quote for any 1 member of the portfolio

- Fidelity: It is absolutely a headscratcher how, in 2024, Fidelity can have trouble getting quotes for liquid public stocks during market hours (e.g., the other day, their buy of an entire pie failed because they could not get quotes for "DVY" which is highly liquid

- M1 fails absolutely miserably on back-office functionality. Selling losing lots is almost impossible without major Excel wizardry since the accounting info is held separately in APEX

- M1 fails dangerously on things they should never fail on -- for example setting beneficiaries has been a 4-month journey and still remains unresolved. If you dont have a will, get prepped for Probate! Worse, the failure is a silent failure as it suggests on the UI that beneficiaries are set. You get different answers from different people and each wants to help you but runs from "complex" issues (in M1's case, they are designed to have a single account, so their backend features fail if you have multiple accounts (e.g., a RothIRA and a non qualified account.)

The dangerous, infuriating, and befuddling experience with setting beneficiaries on M1 lead me to stick to the majors (Schwab, Fidelity) because at least I can rest assured they have the basics solidly figured out. It also makes me very hesitant to go to startups for this sort of stuff

> accounting info is held separately in APEX

So the good news is that M1 doesn't use apex for clearing anymore

The bad news is that... things got worse? After they swapped to doing clearing in house, they dropped like a month of incoming wires without reaching out at all, until I noticed on my monthly login. Turns out that they had changed the underlying wire instructions (makes sense), but sent an email saying that nothing would change on transfer instructions (not true).

Then the next month, they still dropped wires even with the correct instructions, because... ???? unknown reason. Again no contact, until I reached out and asked wtf. Third month, everything worked even though nothing was changed from the prior month.

So there's a reason why I won't put more than SIPC worth in M1 or any other new fintech. And yes, it's backend incompetence as the primary reason.

I'd love to earn your business.

The only thing I use M1 for is to automatically purchase a 60/40 split of VTI/VXUS with any available deposits, so if double can do that, then maybe I'll check it out. If y'all are gonna charge a monthly fee down the road though, it's probably not for me.

I'd love to understand why this feature/product requires an entire startup. I dont mean to be dismissive -- obviously it does, as shown by my experience with Fidelity Baskets given they cannot achieve it!

Also, I used FolioFN and ShareBuilder for years to do the same and they seem to have flopped despite having a compelling product. I'd love to understand why such an obvious feature/product with sound alignment to financial recommendations cant seem to do well in the marketplace!

Very basic, maybe stupid question: If you're not changing your portfolio strategy or altering your weights, does this work by rebalancing your investment every so often, so that the % of total dollars you hold in an index continues to match the weights you set?

Like if a customer creates an index that's 50% AMD and 50% NVDA, and you put $100 in that index, does the customer have some underlying account that initially apportions $50 to each, and then if the next day their NVDA is worth $52 and their AMD is worth $48, the system will sell $2 worth of NVDA and buy $2 worth of AMD?

And if that's so, can you set target thresholds for when you want it to rebalance? Like, not until one stock deviates more than 10% from its ideal weight?

Not a stupid question at all.

Short answer for your simple scenario is yes it would rebalance. The longer answer is it depends on the output of our optimization engine.

Our optimizer tries it's best to make the portfolio better, taking into account drift, trading costs and taxes and potentially holding costs for etfs and a factor model for broad diverse portfolios. Wash sales also play a large part because by default we prevent any wash sales from taking place.

These objectives can compete against each other (tax harvesting is generally good but in your example requires selling AMD not buying it). We run an optimization to try and balance these and come up with trades that make the portfolio better. By default we rebalance if the optimizer thinks the portfolio will get better above a threshold we set.

We have the ability to rebalance based on naive weight drift as you discussed at the end of your comment - right now it's not enabled by default. We are hoping to add a setting so users can enabled the optimizer to only trade if x number of stocks have drifted more than y%.

Please check out this article to learn a bit more: https://help.double.finance/en/articles/9718142-portfolio-op...

Another stupid question. How much of that is your total portfolio?

More than 30%? Less than 30%?

Less than 30% means that you're still ok if double fails. More than 30% means you have a significant portion riding on it.

If you're worth 50 million, you can probably lose 5-15 million and still be okay...

In the feature comparison table, I find it deceptive or at least a dark pattern to mark the competitors with a simple check and yourself with a big green check when a feature is present.

A product that I've wanted for a long time is "broad market index fund , minus the individual stocks I am overweight in due to current or previous employment equity" (e.g. VTSAX - MSFT, GOOG/GOOGL), any chance you can handle this today/build it out in the near future? Sounds like you might be able to handle this already?

Yes we can handle this already. You can customize our broad market indexes by removing or lowering the weights of specific stocks (or sectors although you asked about stocks).

Awesome, thanks for confirmation!

From a functional perspective, you can already do that using options, look at market neutral strategies for an example of how to construct a position like this. From a practical point of view, I doubt you want to get your nose into complex financial instruments just for that.

To your point, I _very much do not_ want to stick my nose into complex financial tools, hence my desire to use a more simple tool to get the exact value of "give me the thing I generally want, minus the one or two things I don't." Sounds like this is one option for doing so!

I'd argue it's a good idea to consider one's current job-industry as an aspect of diversification even without having large RSUs/stocks/options.

Better to have either a market downturn you can ride out while working, or chronic unemployment while your investments are strong, instead of the double-whammy of long-term unemployment and a big portfolio downturn at the same time.

Totally valid, I should have written it as, "current employment, current/previous equity."

I'm JJ's brother and an investor in Double so I'm a little bit biased but I believe reducing/eliminating AUM fees is a huge net positive for the world. The performance drag over long term that money managers charge is a tax on people's retirement savings. What Vanguard/Bogle did with Index funds was massive, and I think Double can be this generation's Vanguard. Professional and powerful money management tools with rock bottom/no AUM fees is a massive opportunity. Congratulations on the launch JJ and Mark!

If Double doesn't charge management fees nor commissions for trades, how does it get paid? Flat fee or payment for order flow?

SV money and banking relationships don't prevent a total meltdown, as seen in the Andreessen Horowitz-backed Synapse saga with Evolve.

Assume there's just a 0.1% of a meltdown and you're better off sticking to Vanguard ETFs.

https://archive.is/G3cYF

This is great, exactly what I was looking for, but how do I know I can trust you? I'm a bit hesitant to wire large amounts of money to a startup.

Also, how do you make money?

Why trust us?

1. We're working with Apex Clearing, a large US Custodian with more than $100B of assets. Your account is in your name there.

2. We're well funded and backed by reputable investors (YC, Matrix, Youtube Cofounder, and many others).

3. We are registered with the SEC as an registered investment advisor.

4. I personally am in the process of transferring nearly my entire net worth onto the platform.

We eventually will charge a monthly fee as described in our Form CRS, but we are waiving this fee for the time being. Eventually we plan on making money eventually like Robinhood, M1 and other commission free trading pioneers. This means PFOF, Stock Lending, line of credit, etc. We are not currently offering these products. Please see our website for more details and our disclosures: https://double.finance

Great answer, thank you.

Another question: do you guys support trading of fractional shares in these custom indexes? If so, what's the smallest supported share % (eg 1%, or 0.01%)?

Yes we support fractional shares!

The fraction of a stock you can buy is currently based on a dollar amount. In our case right now it's $5.10 per stock ($5 with $0.10 of room to allow for fluctuations in prices). We are looking to lower this over time though and as our daily trading volumes grows this should come down significantly.

Love 4.

I'd be wary about 4. I've worked at a fintech startup before where the founders boasted about how they had moved all their net worth onto the platform. Some time later over a casual chat and drinks, it turned out this was far from the truth. Don't just take people's word for it, I may be biased about startups now, but "trust but verify" is a good motto to go by.

Number 4 makes it sound like a scam to me.

"Don't worry bro, you can trust me" type of vibe.

PFOF is a deal breaker. If everyone but Fidelity is doing it thats a huge selling point for Fidelity. Go against the grain and do what is right for your customer if you want to have the net worth of people who care about their money and thus more trust than Robinhood.

Why would you care about PFOF as a retail investor? You're benefiting from it.

No you are not. Your orders are not sent to the best exchange execution possible but to market makers who pay kickbacks to your broker and give you a far worse deal with every single transaction. The cost of poor execution is much higher than a 2 dollar commission (which is what Fidelity shows). It also reduces market transparency.

> Your orders are not sent to the best exchange execution possible

Look up NBBO, that would be illegal. You're getting better execution as a retail trader thanks to PFOF.

I have tried several PFOF and regular brokers. The spreads end execution of PFOF where far worse.

IBKR, vanguard, and I think even Bank of America also don't do PFOF.

Several years ago, I worked at a company called Motif Investing that was conceptually similar this. It was marketed more as a "build your own ETF" kind of thing. You could assemble and weight up to 30 stocks in a "Motif" and manage it over time. We had some of the features you mention as well. I was happy with the product and enjoyed working their, but the business never really took off. I wish you the best in developing your company!

Thanks. I know of and have always respected Motif.

Would love to chat about any hard learned lessons along the way if you're up for it - founders@double.finance

This looks very cool - but I'm hesitant to sign up without knowing how you make money. Is it PFOF? Transaction fees? Flat fee?

Typically an ETF takes a management fee of 0.1-0.5% of assets per year. I expect this build-your-own-ETF to do the same, with fees on the higher side.

They specifically say no AUM fee.

This can change on a whim and you have no security against it.

For example, Guideline. They charged fixed fees on employer 401k accounts , until they didn't earlier this year.

We eventually will charge a monthly fee as described in our Form CRS, but we are waiving this fee for the time being. Eventually we plan on making money like Robinhood, M1 and other commission free trading pioneers. This means PFOF, Stock Lending, line of credit and other potential revenue sources. We are not currently offering these products. Please see our website for more details and our disclosures: https://double.finance

What will be the structure of that upcoming monthly fee?

I'm not interested in investing my time and money getting onboarded with a service unless I know the long-term fees are going to be amenable. If it said something like, "$15/mo and free for the first year" I would be on board.

Is there any resources on how one should go about doing this “make your own index fund” manually? I live in the EU, and of course, I cannot just use this tool. I’m happy to have a passive tool that tracks my portfolio and spits out the instructions to me for example: “sell 10 AAPL and buy 4 AMD to balance your portfolio”. I’m more looking for education around operating such a fund, when to rebalance, when to make a stop loss limit etc.

Of course, my money I cannot live without is in High yield savings account and Vanguard ETFs. I will only play with ^ ideas with the money I gamble on stock picking.

If you would trading daily and randomly, trading cost alone can kill your capital after a few years. Hence my biggest concern would be the percentage charged for trading.

This. I'm a Dave Ramsey fan, and I practice the "buy monthly and keep forever". If it drops, it's even better/cheaper (only 'trustworthy' assets - lately I've added India to the mix).

Daily trading makes the broker rich; (my) preferred way is the Dollar-Cost-Averaging of buying some 'trustworthy' assets and keep them for 10-20-30 years (when I will need them in my later-later years and/or pass them down to the next gen).

In regards to making a "S&P - company/sector" portfolio, how can you compete with other ETF issuers? I feel like you wouldn't be able to get an expense ratio close enough to other large ETFs for the risk weighted return to overcome it. You can maintain a low expense ratio that down weights a sector by combining ETFs. But instead of having a high AUM to reduce churn, that expense is on me.

I'm a bit confused by your question, but we do not plan to charge any AUM fees.

By direct indexing you get a lot more flexibility to customize the index on a stock/sector/factor level.

Thanks for checking us out.

Would you consider making the optimizer available as a standalone tool?

I've wanted a tool to do this - set a target portfolio and tell me what trades to make, taking into account transaction costs and index rebalances. I just want to buy some broad indexes so it would be great if I could buy VOO and VWRL and forget about it, but ETFs are tax-disadvantaged in my jurisdiction [0] so I tried to replicate them manually in spreadsheets. I would consider switching brokers to someone who offered this tool, though right now you're not available in my area.

[0] https://nationalpensionhelpline.ie/taxation/tax-on-investmen...

I'd love to make some of our tools available outside a brokerage relationship, but this isn't something that's on our roadmap right now. If you want to chat about how you might be able to do this more effectively yourself, please let me know - founders@double.finance

Hi JJ and Mark, I'm a quant on an index desk at a hedge fund. I had a look around your app, it's interesting - I have a few comments, I'd be happy to share them if you hit me up at: reedf1@gmail.com

Congratulations on the launch! Wishing you the best of luck.

Q: why only US residents? Other brokerages in the US take in non-US residents (in my case, not even a US person).

Am I supposed to be able to side-scroll those categories in /explore? Can't find any way to, and the last card is half cut off. I'm intrigued to explore strategies I'd never thought about, but can only see about 3 cards per category.

This is Brave on Windows.

Would also be nice to know in advance what the price/profit model will be (on the site, I see you've answered it here). I would expect a brokerage to be a long term relationship.

Appreciate all the feedback. Will look into both points.

The way actual index funds vs individual balancing works is different.

For individuals if you buy a stock and sell it at loss within 30 days, that’s considered a wash sale. AFAIK doing trades like that are penalized and not considered losses from tax perspective.

So if you’re balancing the portfolio everyday like FNILX and VOO with 500 trades, you’d be racking up tons of wash sales.

IRS will come knocking if you fraudulently claim losses.

seems like a lot of work, man-hours, and funding just to give people lots of different ways to get slightly worse returns than SPY

That is the entire portfolio management industry, it has a proven track record of success.

If I were to set up a customized S&P500 (with some tweaks) and over time companies leave and/or are added to the index. Will those changes be reflected in my custom S&P500? In the months or years in the future will it buy or sell these new currently unknown companies?

Yes we handle corporate actions and index additions or deletions and weight changes over time for you.

The guts of this get a bit complicated and I want to make a blog post about how we achieve this for adjustments.

Why not just buy the basket of stocks?

This gives you knobs to turn, which gives users shots of dopamine (at the cost of lower long run expected return) and helps retention.

I really enjoyed how under Explore, if I set "Risk Tolerance" to "Low" (which it is) there are zero options (until the Bogglehead??? forum creations). This has helped steel my resolve against investing.

Can someone ELI5 this vs all of the other options? Say I have a $300k in RSUs and a handful of stocks and a 401k w/ fidelity. What does this do? Also is this similar to the etrade portfolio things?

M1 Finance also has this capability, does it not? Lyn Alden maintains her newsletter portfolios using M1. (I'm Canadian and to my knowledge, no established company does this well for Canadian accounts.)

As far as I'm aware, M1 does not offer automatic portfolio rebalancing or optimization. I also don't think you can really do any sort of direct indexing as you cannot lower the weights of any stock below 1%.

I think we have a few extra features as well and would love for any M1 users to check us out.

Been looking for something like this. Well done.

"YC Public Companies" widget on the front page showing a -46% return: joke or bug?

So ... where's the edge? "Create your own portfolio" doesn't sound at all like you're taking any responsibility in making sure Average Joe gets any competitive advantage to stay above the market.

Seems yet another tool like Robinhood and a trillion alike that offers you the possibility to gamble some money, with absolutely no advantage over a blindfolded monkey throwing darts at a newspaper's financial pages.

By the way, do you want an edge? Or at least understand what an edge is and how it's supposed to feel like? Take a look at my quantitative finance tutorials, good stuff will be coming soon, until now I only got to cover a rigorous introduction: https://www.aquarianz.com/ (Another QUAntitative RIsk ANalysis Zoftware)

It's what I want since I've been just DCA with recurring buys on Robinhood.

Let me know when you guys plan to hire.

How does double compare to Betterment?

FYI, on Chrome (Windows machine) your home page is missing the vertical scroll bar.

Congrats! How does this perform against VOO if you take tax harvesting into account?

We're working on backtesting our specific version of TLH over the past 10 or 20 years, which mean I unfortunately can't comment on that yet.

For reference, other TLH providers generally claim 1-2% increase in after tax returns.

https://www.wealthfront.com/blog/how-wealthfronts-tlh-pays-f... https://frec.com/resources/blog/why-you-should-leave-tax-los...

Are there plans to allow residents of other countries? (namely Canada in my case)

Unfortunately this is not on our immediate road map. Sorry about that. I'm Canadian myself and I really wish we could.

Do you plan to offer subscription-based access to other users' indices?

At this time no but if you have a index or strategy you want to see on Double please email me at founders@double.finance

Say I wanted to replicate a total market index like VTI. Is that possible?

For less than what it costs Vanguard to do it? No.

So right now a Direct Index version of VTI is not live on the site. You want a pretty large account size in order for this type of direct indexing to make sense.

Also right now we only support fractional securities and about 3% of VTI is not currently fractionable by our custodian.

how does this work with taxes? When an ETF rebalances, there is no tax impact, but wouldn't there be a tax impact with this tool as you're individually managing the stocks?

Short answer is yes there is a potential tax impact while rebalancing, but this is often a benefit due to the opportunities it presents to tax loss harvest, which we enable on accounts that are sufficiently diversified.

With an ETF there is still a tax impact it's just shifted to the holder of the instrument who gets to decide when to sell or buy.

With an ETF, I can hold it for 20 years, and the value keeps compounding.

However, with this other method, each annual rebalance takes value out of the account. Unless I'm sure I can outperform an ETF with this active rebalancing, this tool would have worse outcomes.

If I am trying to optimize my portfolio, it seems I should choose ETFs that are composed of the equities I want and use current income to attempt to rebalance (e.g. purchase underperforming equities, instead of selling high performing equities to buy underperforming ones).

This tool seems like a worse strategy?

love it! any plans to allow for sharing custom indexes with friends/family (or would that run into regulations)?

Yes we'd love to allow for sharing and we've got some ideas for that already.

Very excited to try this out.

Can I acat into double?

Yes, we support ACATS. You can initiate these through the app under Transfer Funds.

Are you hiring?

Optimistically. If you're interested shoot me an email jmaxwell at double dot finance

> Double is only available to US residents.

I would have loved to see that message on the Sign Up page before I enter my email address.

Thanks for the feedback, we will try and make this more clear for Non US IPs.

US residents != US IPs

Indeed, some US residents do travel outside the country occasionally.

Oh for sure, we just plan on showing a banner if the IP is non US. You can still fill out the application if your IP is non US.

And non-US residents occasionally use US IPs.

US Residents? What about US Citizens living abroad?

No unfortunately we do not currently support US citizens residing abroad. There are a few restrictions on opening an account, namely: must be 18 years old or older, has a U.S. social security number, a permanent U.S. residential address and phone number, and currently resides in the U.S.

Feel free to check back here for updates https://help.double.finance/en/articles/9457976-who-can-open...

Show HN: Double – Design and invest in your own stock index