If you have a brokerage account, you have likely learned about the benefits of "direct indexing," a way to customize, to your liking, stock holdings based on an index such as the S&P 500. Sounds intriguing enough.

In the past, "direct indexing meant paying a lot in commissions and fees," but these days, "thanks to online brokerage platforms (and many RIA custodians) that offer zero-commission trading, investors don't have to be millionaires to do direct indexing," quoting the InvestmentNews.com article "Direct indexing as an investment strategy" (tinyurl.com/4ybr78j6).

As a result, interest in direct indexing has risen and is expected to continue doing so. According to Cerulli Associates (a research, consulting and analytics firm), assets for direct indexing were expected to have a five-year compound growth rate of 12.3% and reach $825 billion in total assets by the end of 2026 (tinyurl.com/wj2jz3ae).

What's the appeal?

With direct indexing, instead of owning a fund, you own the stocks themselves, and by doing so, you can create your own "personal index." That also means that you can take advantage of changes in pricing of those stocks as they trade throughout the day.

That is, "[d]irectly holding securities within an index enables you to potentially take greater advantage of tax-loss harvesting, a maneuver that may ultimately lower your tax bill. Tax-loss harvesting involves selling an investment at a loss, replacing that investment with something similar (but not substantially identical) and using the tax loss to offset other taxable capital gains," states J.P. Morgan Wealth Management's "What is direct indexing and how does it work?" (tinyurl.com/bdhfna7b). The potential tax benefits apply in a taxable account (not an IRA or 401(k)).

Tax-loss harvesting may or may not be successful. With your eyes open, consider this: "[T]he potential tax benefit of this approach depends on the stock market environment and also on whether the 'wash sale' rule applies to the loss transaction, which may defer or deny any tax deduction arising from the loss sale if a substantially identical position is repurchased too quickly," notes the J.P. Morgan article. IRS Publication 550, "Investment Income and Expenses (Including Capital Gains and Losses)," provides more details on wash sales (tinyurl.com/4mpshyr5).

Further, "Over time, the opportunity to harvest capital losses can decline as stock values rise. This is especially true in a portfolio you've held for several years that has appreciated significantly," says the Charles Schwab article "The Pros and Cons of Direct Indexing" (tinyurl.com/y2pffjaa).

What about costs? Morgan Stanley notes in the article "Beyond ETFs: The Benefits of Direct Indexing" (tinyurl.com/55hway5d) that "the strategy may lead to higher management fees than investing in similar ETF strategies, because the level of customization may involve buying and selling securities that can lead to higher transaction costs." Also, there is an overall financial consideration: "[W]hen owning individual securities, direct indexing typically requires a relatively high minimum investment of $250,000."If your direct index is mimicking the S&P 500 Index, you could be holding and trading hundreds of stocks -- quite a number to manage, even though the vehicle used is a separately managed account. "[E]each [stock] will have its own cost basis, dividends, and profit and loss, which could become burdensome at tax time," according to the Charles Schwab article. Burdensome to you –- and potentially your tax preparer.

To read more about direct indexing, check out the following:

-- FINRA Investor Insights' "The Basics of Direct Indexing" (tinyurl.com/35z9pvmy). FINRA oversees member broker-dealers who do business in the U.S.

-- Fidelity Investments' "Direct indexing in detail," (tinyurl.com/4jw68njy). Fidelity is a global financial services company.

-- Parametric Portfolio Associates, considered the pioneer of direct indexing, offers details of its history at tinyurl.com/4k2hamcb.

My advice: Do your homework before jumping in.

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Someone who is 50 or older is able to set aside more money into a 401(k) than someone who is under 50. Called a "catch-up contribution," the idea is to get more money working for you in a tax-advantaged way before you retire.

On Sept. 15, the IRS and the Department of the Treasury issued final regulations that incorporate SECURE 2.0 Act of 2022 changes to catch-ups.

People who are approaching ages 60 to 63 will benefit from a special increased catch-up. This change applies to 401(k)s as well as other eligible retirement plans, such as 403(b)s. See tinyurl.com/5n7zysax.

First, a little background.

Catch-up contributions first came into being as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (tinyurl.com/3tm3kzk7) as a means of helping older workers save more for retirement. The initial catch-up amount was $500, with a planned increase after a few years to $1,000.

In 2025, the maximum amount that a person under age 50 can contribute to a company retirement plan is $23,500; someone who is 50 or older can kick in an additional $7,500 as a catch-up contribution for a total contribution of $31,000.

Under the newly finalized regulations, effective 2025, those who reach ages 60 through 63 this year have a catch-up limit of $11,250 instead of $7,500, meaning the total contribution for that age cohort is $34,750. When someone turns 64, the catch-up limit falls back to the "regular" catch-up contribution.

There will be a yearly cost-of-living adjustment to the catch-up limit for ages 60 to 63 after this year.

You might recall that there was another SECURE 2.0 provision involving catch-up contributions related to those 50 and older who earned more than $145,000 in the previous year. The provision, which was set to start in 2024, called for those catch-up contributions to be designated as post-tax Roth contributions as opposed to pre-tax contributions.

As to Roth catch-up contributions, the final regulations followed proposed regulations published in January 2025 (tinyurl.com/3vfetwsv).

A Roth catch-up contribution would be similar to any Roth contribution in that it would not be "excludible from a person's gross income," and the contributions would need to be held "in a designated Roth account." In addition, a retirement plan "would need to permit a participant subject to a deemed Roth catch-up election to elect to cease making additional elective deferrals."

As for the implementation of the Roth catch-up contribution, IRS Notice 2023-62 (tinyurl.com/3ufhyxdp), which was released in August 2023, indicated that there would be "an administrative transition period" of two years after Dec. 31, 2023, for the requirement, meaning the Roth catch-up contributions would not start in full until 2026.

The final regulations provisions related to the Roth catch-up requirement "generally apply to contributions in taxable years beginning after Dec. 31, 2026," citing the IRS news release about the final regulations (tinyurl.com/jjvdysa3). However, "the final regulations provide a later applicability date for certain governmental plans and plans maintained under a collective bargaining agreement."

In addition, the regulations "also permit plans to implement the Roth catch-up requirement for taxable years beginning before 2027 using a reasonable, good faith interpretation of statutory provisions."

When the proposed regulations were released, they elicited more than 20 comments over a two-month period.

One comment offered some interesting thoughts. The person recommended that the catch-up age should be raised from 63 to at least 65, if not 67, saying that it would take strain off Social Security "and people's dependence on it." The person added that "I am 64 and still in need of 'catching up' on retirement preparation, especially given the inflation of the last few years. This is true also given that the dollars I have put into retirement no longer have the value they did."

If you are age 60 to 63, take this opportunity to contribute more to your 401(k), keeping in mind that your maximum is $34,750.

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If you are a young person starting out in your first job, you’ll want to be able to make informed decisions that can lead to long-term financial success.

Being on top of personal finances involves two time dimensions -- the present and the distant future. You act in the present, and what you do on a day-to-day basis dictates the future. It’s that basic. And it’s this little piece of information that determines what life looks like 10, 20 and 50 years from now.

Your starting point: A realistic way to be intentional when handling take-home pay. Call it a “budget,” or better yet, a “tracker.” What you want is to track where your money goes.

If you track your expenses and your income for three months, you’ll have valuable information that can lead to good decisions.

Let’s review some tools together.

Bank of America’s Better Money Habits website lists steps a person needs to consider, including calculating net income, tracking spending and setting realistic goals (tinyurl.com/muxpy8xz).

You’ll also find budgeting ideas such as a 50/30/20 strategy (50% for needs, 30% for wants and 20% for savings or debt) or a pay-yourself-first plan (put an amount in savings before paying bills or making purchases).

The Federal Trade Commission (tinyurl.com/bd655ypb), the Navy Federal Credit Union (tinyurl.com/3j8k5uf5) and financial technology company Intuit (tinyurl.com/47y3ktxk) offer budget worksheets. You can also find budget-tracking cellphone apps, such as Rocket Money and YNAB (You Need a Budget).

Once you have a budget, think about managing cash flow. One method offered by the credit reporting agency Experian is a personal cash flow statement (tinyurl.com/5uydb75a). The statement has two sections: a balance sheet (what you own versus what you owe) and a cash flow statement (your cash inflows and outflows).

Be alert to overuse of credit. It’s ever so easy to pay for everyday expenses with a credit card -- and if you are not mindful, it’s ever so easy to borrow money without thinking about it.

Before you use credit, be sure to understand how to repay it. You can easily run the cost of borrowing by using this Discover interest calculator -- tinyurl.com/yu83jfu6.

Take this example: You have $1,000 in credit card debt with interest of 29% that you want to pay off in 12 months. If you pay $25 a month, it will take you 159 months (13.25 years) to pay off interest of $2,953 on the $1,000 you borrowed. (The 29% example is real. When was the last time you checked your credit card interest rate?)

The consumer financial services company Bankrate’s “Effective strategies for getting out of debt” points out that paying off debt “requires commitment, patience and a little bit of grace” (tinyurl.com/bur97awd). Personally, I would strongly recommend avoiding debt for consumer purchases.

Borrowing to buy a house is a different story, raising the importance of credit scores, which assess a lender’s risk of extending a loan to you. A good resource is FINRA’s “How Your Credit Score Impacts Your Financial Future” (tinyurl.com/4emdua64). FINRA oversees member broker-dealers who do business in the U.S.

If you are looking to pay down debt, Bankrate highlights a few strategies: debt snowball (pay the minimum required on all debt, but put added dollars to the one with the smallest balance); debt avalanche (a similar plan, but the added dollars go to the debt with the highest interest rate); and debt consolidation (all debt is combined into one new loan with one interest rate and one payment).

To make wise financial decisions when starting your career, being mindful is the secret.

Keeping track is the method. Everything else will fall into place if you just pay attention day to day and month by month. Time will pass. The future will unfold. Where you find yourself decades from now will depend on what you do all the “todays” from now until then.

The topic of making sound decisions is part of a series of virtual presentations I am giving through the Greenwich Library. For information, please visit juliejason.com/events/upcoming-events.

On another note, the judges of the 401(k) Champion Competition have picked their winners for 2025. See www.401kchampion.com. Congratulations to all four champions!

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