What are the best end of year money moves to make now?
The end of year is an extremely important time for investing, restructuring investment portfolios, and other financial decisions.
Whether you are eager to adjust to new tax rules to avoid supersized bills in the spring, want to reduce exposure to risk in frothy sectors, generate better returns, or just be sure you are making the best moves with your year end bonus money, be sure you are considering these things.
Tax Loss Harvesting
The government now wants to tax you on unrealized gains, and capital gains taxes could be far higher over the next couple of years. Combat this by making the most of any losses and turning them into savings.
Tax loss harvesting is a legal way to sell waning investments before suffering further losses and to get a tax deduction to offset other gains or earned income. Then reinvest the proceeds in assets with a more promising outlook.
Other options here may be charitable donations of stocks, property, vehicles, or other assets.
Retirement Account Contributions
Retirement account contribution limits are rising again. It is one of the upsides of inflation.
Be sure that you are maximizing your contributions to tax saving accounts, like self-directed IRAs and 401ks.
If you are reaching maximum limits, you may diversify with multiple IRAs for your family members. You also have the option of other types of tax deferred or tax-free savings accounts.
Trusts can be useful vehicles for a variety of reasons. You can use them for privacy protection, limiting liability, ease and affordability of transferring assets to heirs, and even creating your own family bank.
Other options you may want to put on your radar are reinsurance, and gifting of investments to heirs early to minimize taxes.
If there is one investment that is on the top of everyone’s list this year, it is real estate. Whether it is to keep up or ahead of inflation, bring in passive income, or to insure downside protection in the face of an uncertain future, real estate checks all the boxes.
The end of year is a vital time to take action when it comes to your money and investments. Whether it is growth, income or minimizing taxes that is your top priority, these are some of the top moves to consider.