End-of-Year Financial Checklist: Investment Moves to Consider

As the year draws to a close, it's an opportune time to evaluate your financial portfolio and make strategic investment decisions. An end-of-year financial checklist can help ensure you're on track to meet your financial goals. Here are some essential investment moves to consider before the year ends.

Review Your Investment Portfolio

Start by reviewing your current investment portfolio. Assess your asset allocation and ensure it aligns with your risk tolerance and long-term goals. If your portfolio has drifted from your target allocation, consider rebalancing your investments. This process might involve selling high-performing assets and buying underperforming ones to maintain your desired balance.

Consider Tax-Loss Harvesting

Tax-loss harvesting is a strategy that involves selling securities at a loss to offset capital gains taxes. This can be a smart move to minimize your tax liability. Ensure you adhere to the IRS wash-sale rule, which prohibits buying the same or a substantially identical security within 30 days of the sale.

Maximize Your Retirement Contributions

Contributing to retirement accounts like a 401(k) or IRA can provide significant tax advantages. For 2023, the contribution limit for a 401(k) is $22,500, with an additional $7,500 catch-up contribution for those aged 50 and above. Consider maxing out these contributions to boost your retirement savings and reduce taxable income.

Review Your RMDs

If you're aged 73 or older, you must take Required Minimum Distributions (RMDs) from your retirement accounts. Failing to do so can result in hefty penalties. Calculate your RMDs accurately and ensure you withdraw the required amount before the end of the year.

Explore Tax-Advantaged Accounts

Beyond retirement accounts, explore other tax-advantaged options such as Health Savings Accounts (HSAs) or 529 plans for education savings. These accounts can offer tax-free growth and withdrawals when used for qualified expenses, providing another layer of financial planning efficiency.

Evaluate Charitable Contributions

Charitable giving not only supports causes you care about but can also offer tax benefits. Consider making donations before year-end to take advantage of potential deductions. Donor-advised funds can be an effective way to manage charitable contributions strategically.

Plan for the Future

Finally, use this time to plan for the upcoming year. Set new financial goals and outline strategies to achieve them. Consider consulting with a financial advisor to refine your plans and ensure they're aligned with your broader financial objectives.

By taking these steps, you can close out the year on a strong financial footing and set the stage for a prosperous new year. Regularly revisiting your financial strategy is key to building and preserving your wealth over the long term.