Year-End Investing Strategies for Your Portfolio

As we approach the end of the year, it’s a great time for you to assess your portfolios and explore strategies to maximize returns and minimize tax liabilities.

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Here are a few key steps to consider:

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1. Tax-Loss Harvesting: If some of your investments underperformed this year, consider selling these to offset gains from more successful investments. This process, known as tax-loss harvesting, can reduce your capital gains tax and potentially improve your after-tax returns. You can use up to $3,000 in capital losses to offset ordinary income each year, carrying forward any additional losses to future years.

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2. Rebalance Your Portfolio: The year-end is a good opportunity to review your asset allocation. Over the year, certain assets may have outperformed or underperformed, causing your portfolio to shift away from your target allocation. Rebalancing helps you manage risk and align your investments with your long-term goals. Consider reallocating gains from stocks to bonds, or vice versa, to maintain your desired mix.

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3. Max Out Tax-Advantaged Accounts: Contributions to accounts like IRAs and 401(k)s offer tax benefits. If possible, maximize contributions to these accounts before year-end to reduce taxable income. For traditional IRAs and 401(k)s, contributions are tax-deferred, which can lower your taxable income for the current year. For Roth accounts, you won’t get an immediate tax break, but future withdrawals will be tax-free.

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4. Increase Charitable Giving: Donating appreciated stocks or cash to qualified charities allows you to support causes you care about and receive a tax deduction. Be sure to keep records for donations and consult a tax professional if you have questions.

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5. Book an Account Review: DM me to discuss how these strategies fit your unique situation.

Making strategic moves like these before the year ends can help position your portfolio for success in the new year.