End-of-year financial strategies are essential for planning for 2024. These tips will help you make smart financial choices that pave the way for a prosperous new year.

As we approach the end of 2024, it’s crucial to take charge of your finances and set the stage for a successful 2025. Whether it’s adjusting your investment portfolio, increasing savings, or minimizing taxes, there are several practical steps to consider before the year wraps up.

Adjust Your Investment Portfolio

The stock market has seen significant growth this year, with a promising outlook for early 2025. One key financial move to consider is to rebalance your investment portfolio. 

“Rapid changes in the market can cause you to take on more risk than intended,” a financial expert advises. “It's essential to realign your portfolio to safeguard against potential downturns.”

Curious about portfolio rebalancing and when to sell stocks? Join our Investing club, InvestingFixx, for discussions every other Monday night on Zoom!

Optimize Your Cash

Most bank savings accounts offer a meager four-tenths of one percent in interest. However, you can find high-yield savings accounts that pay significantly more, often around four percent. Don’t let your savings stagnate in a low-interest account; secure those high-yield rates now.

If you don’t need immediate access to your cash, consider investing in a CD or a non-retirement annuity. “One-year CDs can yield 4.65 percent, while two-year CDs are just slightly lower. Even three-year non-retirement annuities can offer 5.5%,” the expert explains.

Withdraw Your RMDs

For those aged 73 and older, remember to take your Required Minimum Distributions (RMDs) from retirement accounts before year-end. If this is your first RMD, however, you have until April.

“It's crucial to understand the required amounts. Your tax advisor or software can assist with this. Missing your RMDs can lead to a hefty 25% penalty on the amount you should have withdrawn,” the expert warns.

Roth Conversion Consideration

Why think about Roth conversions before the year ends? They could reduce your future tax obligations and allow your income to grow tax-free. With the current political landscape, the lower tax brackets seem likely to remain.

“Roth conversions can be beneficial for those aiming to reduce RMDs in the future or wishing to leave their retirement accounts to heirs,” the expert adds.

Review Your Beneficiaries

If it’s been a while since you reviewed the beneficiaries on your insurance policies and retirement accounts, now is the time. Beneficiary designations override a will.

Major life changes like marriage, divorce, or the birth of a child necessitate updates to your beneficiaries. “Ensure you’ve also designated successors for those beneficiaries,” the expert suggests.

Annual Gifting: Act Now

We’re not just talking about charitable giving, although that's great too. “Annual gifting means transferring some of your wealth to heirs while you’re alive rather than after passing,” the expert explains.

Consider whether your financial support could be more impactful now, helping loved ones buy a home or a car while they’re younger.

Maximize 529 Contributions

Most states allow tax deductions for contributions to state-sponsored college savings plans, making it the perfect time to enhance your 529 contributions. “To qualify for this deduction, you typically need to contribute to your state’s plan. Contributions grow tax-free and can be withdrawn without additional taxes for qualified educational expenses,” the expert notes.

Additionally, thanks to the SECURE Act, up to $35,000 can be rolled over to a Roth IRA for the child if they decide not to pursue college.

Tax Loss Harvesting

“Many stocks have lost value this year,” the expert points out.

Tax loss harvesting involves selling underperforming stocks or investments to offset capital gains and reduce ordinary income tax up to $3,000. Check out the list of top 10 losing stocks of the year here and assess whether you hold any.

Get Your Finances in Order

Looking to enhance your financial future in 2025? Consider joining our money makeover program, FinanceFixx.

This program is ideal for anyone wanting to create or update a budget or find extra savings for significant goals like retirement. The next session for pre-retirees begins on January 8th. Sign up today using code HOLIDAY for a discount of $100. Let’s make 2025 your most financially successful year!