It’s that time of the year again.
Time to take stock of your finances over the past 12 months…
And make plans to optimize your financial health in the New Year.
I’ve done it for a decade, and it’s always helped me start the new year on the right foot. So, in the spirit of the Christmas celebrations, allow me to share eight essential strategies and considerations for your year-end financial preparations.
- Evaluate your investment portfolios, consider asset allocation, risk tolerance, and tweak your strategies in line with market changes.
- Consider selling underperforming investments. This helps you offset capital gains and reduce tax liabilities. And please consult with a financial advisor or tax professional for proper guidance on tax implications.
- Contribute the maximum allowable amount to your 401(k), IRA, or Roth IRA before the year ends. This offers tax benefits and bolsters your retirement savings. If you’re 72 or older, take your RMDs (required minimum distributions) to avoid penalties. The deadline is December 31st.
- Then, explore opportunities for tax optimization, like deferring income, accelerating deductions, or utilizing tax-efficient investment strategies.
- Consider charitable donations before Dec. 31st. Apart from supporting causes you believe in, charitable contributions can offer tax deductions.
- Maximize contributions to Health Savings Accounts (HSAs) if you’re eligible. HSAs provide a triple tax advantage (tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses).
- Evaluate your insurance coverage, including health, life, home, auto insurance, and more. Ensure your policies adequately cover your needs and consider adjustments — if necessary — for the coming year.
- Review your estate plan, including wills, trusts, and power of attorney documents. Update beneficiary designations on retirement accounts and insurance policies if needed. Ensure your health care directives and proxy documents reflect your current wishes and appoint trusted individuals to make medical decisions on your behalf if necessary.
And of course…
I encourage you to celebrate achievements as you identify areas for improvement. Then, establish financial goals for the upcoming year.
The bottomline is:
Whether saving for a significant purchase, paying off debt, or increasing investments, setting clear objectives and taking proactive steps can help you position yourself for financial resilience and success in the coming year.
And if you need more insight on what to trade for bigger returns on your money…
Click here to see our #1 trading approach for six-figure returns in 2024.
Wishing you a blessed day,