Looking to Year-end
1. Review your income or portfolio strategy.
Are you reaching a milestone in your life such as retirement or a change in your personal circumstances? Has your tolerance for taking risk
changed? We experienced historic volatility this year. The broad-based S&P 500 Index lost over 30% in one month. The sell-off was steep and violent but short-lived. As November came to close, the major market indexes had recaptured prior highs. It’s a testament to adhering to the long-term financial plan.Did you take volatility in stride, or feel any uneasiness? If you experienced sleepless nights or sought the safety of cash, now may be the time to re-evaluate risk and your approach. One of my goals has always been to remove the emotional component from the investment plan.
2. Take stock of changes in your life and review insurance and beneficiaries.
Let’s be sure you are adequately covered. At the same time, it’s a good idea to update beneficiaries if the need has arisen.
3. Contribute to a Roth IRA or traditional IRA.
A Roth gives you the potential to earn tax-free growth (not just deferred tax-free growth) and allows for federal tax-free withdrawals if certain requirements are met. You may also be
eligible to contribute to a traditional IRA. Contributions may be fully or partially deductible, depending on your income and circumstances.
4. Charitable giving.
Whether it is cash, stocks or bonds, you can donate to your favorite charity by December 31, potentially offsetting any income. Did you know that you may qualify for what’s called a “qualified charitable distribution (QCD)” if you are over 70½ years old? A QCD is an otherwise taxable distribution from an IRA or Inherited IRA that is paid directly from the IRA to a qualified charity
[Fidelity: “Donating to a charity using a qualified charitable distribution (QCD) ”]. A QCD may be counted toward your RMD, up to $100,000. If you file jointly, you and your spouse can make a $100,000 QCD from your own IRAs. This becomes even more valuable in light of tax reform as the higher standard deduction may preclude you from itemizing. You might also consider a donor-advised fund. Once the donation is made, you can generally realize immediate tax benefits, but it is up to the donor when the distribution to a qualified charity may be made.