Year End Financial Moves - 2015 EditionSubmitted by Castlebar Asset Management on November 5th, 2015
The leaves are starting to fall and pile up which means we are less than two months away from year end. Here are a few simple things you can do to help your financial situation as we wrap up 2015.
Review Your 401k
Check in on your 401k or other work place retirement plan. In 2015, the maximum contribution levels were lifted by $500 to $18,000. If you are looking to max out your 401k you may have to adjust your contribution amounts to reach the new max level. If you are not maxing out your contributions, consider adjusting your contribution. If you received an increase in pay or bonus this is good time to bump your contribution level so you are in good shape for 2016. I always challenge my client’s to increase their contribution by 1% of their income each year. You won’t even notice it coming out of your pay check.
Encourage 529 Gifts For Your Children
As we head into the holiday season encourage your family and friends to consider contributing to your children’s 529 account instead of buying a gift. Grandparent’s love to spoil their grandchildren especially when they are very young. Infants and toddlers may not appreciate new toys or clothes but small contributions to a 529 will compound over time. Your children will appreciate a larger college fund when they head off to school. Think about this for birthdays as well!
2015 has been a volatile year for stocks. This means that your retirement and other accounts may be off track from their target investment allocation because of the market movements. It is important to bring your investments back in line with your target investment plan. It is a good plan to do this at least once a year (but not more frequently then that) to achieve optimal performance over the long term.
Tax Loss Harvesting
With the volatility in the market there is likely some opportunities to sell stocks, ETFs or mutual funds to harvest some losses to help with your tax bill. Certain sectors like energy and basic material stocks have had a difficult year and you may find some candidates to sell with a loss to offset some gains in other areas. Remember you have to wait 30 days to repurchase any stock you sell at a loss to avoid a wash sale. You can buy a similar fund or company. For instance, if you have a loss in an S&P 500 index fund you could select another S&P 500 index fund or ETF to invest in, as long as it is not the same security.
While you are reviewing your 401k and other investment accounts take a look at your beneficiaries. It is important to have beneficiaries selected for your accounts. If you have not selected any yet make sure you add some to your accounts. The primary and contingent beneficiaries will inherit your accounts if you pass away. Reviewing your current beneficiaries is also important if you have set up a trust, gone through a divorce or maybe had a child since you last updated them.
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.