Here’s 5 Year End Investment Moves to make now:
1. Rebalance your portfolio. This is a great time to rebalance. Make sure you get your portfolio back to it’s original asset allocation. If stocks have been strong, they may now represent a higher percentage of your portfolio than last year. Therefore, making most portfolios more aggressive than they were before the year started. Sell the winners and take the money and put it in your losers. It’s buying low and selling high.
2. Finish IRA Distributions. This only applies if you are over 70 1/2. If you have an IRA and have reached this age, there is a formula for taking distributions. Make sure you take your required minimum distribution (RMD) before December 31st. The penalty is pretty stiff for not doing it. It will be 50% for the money not distributed! Yikes!
3. Review your asset allocation. Year end is a great time to revisit your risk tolerance. Your feelings may have changed regarding the amount of risk you are willing to take. It could have came from a significant life event or just a change in the stock market. Never the less, take the time to make sure you are where you want to be. I’ve had several conversations already about the market at a high and how some investors start to get nervous.
4. Time for tax loss harvesting. Tax loss harvesting will be particularly beneficial this year. You can sell some losers to offset this years nice gains. That way you can write off gains and losses in the portfolio. Potentially saving you capital gains taxes. Check with your advisor to see if there are any positions that can benefit from this technique.
5. Max out retirement contributions. This could be several things. Make sure you have contributed to your IRA or Roth IRA. You have until April 15, 2014 to make your contribution, but why wait? You also could increase your 401(k) contributions before year end. In addition, run a calculation with your 401(k) software to see if you are on track to retire.
December is a great time to visit these suggestions. All five can really help you out financially. They won’t take too much of your time, probably less than an hour. Get it out of the way and enjoy your holidays! Take another 2 minutes and subscribe to my articles for free!