Maximize Your Year-End Financial Health: Expert Tips from Your Trusted Financial Advisor

By Morgan Weil, CFP^®
Senior Wealth Manager & Financial Advisor, RJFS

As the year draws to a close, it's a great time for investors to review their finances and take steps to optimize their portfolios for the upcoming year. Here are some key year-end financial tips for the average investor:

1. Tax-Loss Harvesting: Sell losing investments to offset gains from other investments. This strategy can reduce your taxable income, helping you lower your overall tax bill. Just be mindful of the "wash-sale" rule, which prevents you from buying back the same or substantially identical security within 30 days.

2. Maximize Retirement Contributions: Take full advantage of tax-advantaged accounts like 401(k)s, IRAs, and Roth IRAs. Consider making catch-up contributions if you're over 50. Contributing more before the year-end may reduce your taxable income for the current year.

3. Rebalance Your Portfolio: Review your asset allocation to ensure it aligns with your risk tolerance and long-term goals. Rebalancing helps you maintain a diversified portfolio and avoid overexposure to any one sector or asset class.

4. Consider Charitable Giving: If you’re charitably inclined, donating appreciated securities (rather than cash) can help you avoid paying capital gains taxes while also receiving a charitable deduction. Be sure to consult with a tax advisor to ensure that your donations qualify for tax benefits.

5. Review Tax Withholdings: Check your withholding status to avoid underpayment penalties or overpaying your taxes. Adjusting your withholding allows you to keep more of your income throughout the year.

6. Evaluate Tax-Deferred vs. Taxable Accounts: If possible, consider withdrawing funds from tax-deferred accounts (like IRAs) in years when your income is lower. This can help you avoid higher taxes in retirement.

7. Gift Stocks or Cash to Family: Gifting appreciated securities or cash to family members in lower tax brackets can reduce your taxable estate and potentially lower the overall tax burden for the family.

8. Check for Unused Tax Credits: Review any available tax credits, such as the Child Tax Credit or Education Tax Credit. These can directly reduce the amount of taxes you owe.

9. Assess Your Emergency Fund: Ensure you have enough savings in your emergency fund to cover unexpected expenses. The ideal amount is usually 3-6 months of living expenses.

10. Plan for the Future: Set new financial goals for the upcoming year. Review your investment strategy, retirement plans, and savings targets to ensure you're on track to meet long-term financial objectives.

Taking these steps before year-end can help you minimize taxes, optimize your portfolio, and position yourself for financial success in the new year.

Disclosures: Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Morgan Weil and not necessarily those of Raymond James.