There are only 13 days left in 2022, which is exciting but also means it's time to tidy up our lives before the new year begins afresh.
In the world of financial planning, that means ensuring you best position your investments and tax liabilities for the current and future years.
For example, 2022 has been turbulent, uncharacteristically rattling the bond and stock markets while inflation abounded. If your investment portfolio has become more conservative or aggressive than you initially desired, now is a great time to rebalance.
But, when rebalancing, now is a great time to consider your tax situation and adjust positions while concurrently affecting it.
One such way is by taking your RMD (required minimum distribution) if you are 72+ from the positions that have become overpowering in your portfolio. Another way is by taking a regular withdrawal from your funds until you reach the desired tax bracket, which I discussed in last week's post, Why You Should Consider These Year-End Tax Moves.
For those who hold investments in after-tax brokerage accounts, consider locking in long-term capital gains or realizing losses by selling positions. Such strategies are easy to deploy at year-end since you likely have an excellent estimation of your income.
While the former strategies are popular for those needing to rebalance and take income, a Roth conversion may make sense for your cents if you do not need access to the funds immediately and can trade time for tax-free growth.
Tax filing is right around the corner! These various financial moves can help you enter 2023 in a more optimal position. However, remember to start collecting your various tax documents from throughout the year and start setting them aside with the various mailings you will begin to receive in 2023.
If you are still determining if your portfolio is positioned well, given the changes in the market and your tax situation, please reach out to us and set up a consultation. We would happily review your various holdings with you and discuss steps you can take.
Have a great day and a wonderful holiday season!