Jean Chatzky’s Money Moves To Make Before The End Of The Year
HerMoney with Jean Chatzky
Deep Dive
Why is rebalancing your investment portfolio important at the end of the year?
Rebalancing is crucial because gains in tech stocks may have skewed your asset allocation, increasing risk. By selling some gains and buying underperforming assets, you protect your portfolio from potential market dips.
What are some high-yield savings options available in 2024?
High-yield savings accounts offer around 4% interest, with options like CIT and Everbank. One-year CDs from America First Credit Union pay 4.65%, and three-year non-retirement annuities can yield up to 5.5%.
What are the consequences of not taking required minimum distributions (RMDs)?
Failing to take RMDs results in a 25% penalty on the amount you should have withdrawn. This can be a significant financial hit, so it's essential to ensure RMDs are taken before the year ends.
Why might Roth conversions still be beneficial in 2024?
Roth conversions can help reduce future RMDs, benefit heirs, or provide a mix of Roth and traditional assets in retirement. Even with stable tax rates, they remain a strategic move for long-term financial planning.
What should you consider when reviewing your beneficiaries?
Reviewing beneficiaries ensures that life changes like marriage, divorce, or births are reflected in your estate plan. Beneficiary designations on retirement accounts and insurance policies override wills, so updates are critical.
How can gifting during your lifetime benefit your heirs?
Gifting can help your heirs achieve milestones like buying a first home or funding a major expense. It ensures your money is used when it can make the most impact, rather than waiting until after your death.
What is tax loss harvesting, and why is it important?
Tax loss harvesting involves selling underperforming investments to offset capital gains and up to $3,000 in ordinary income. This strategy reduces your tax liability by utilizing losses in your portfolio.
What are the benefits of contributing to a 529 college savings plan?
Contributions to a 529 plan can grow tax-free and be withdrawn tax-free for qualified educational expenses. Additionally, up to $35,000 can be rolled over to a Roth IRA if the funds aren't used for college.
- Significant gains in the stock market in 2024 were uneven, concentrated in tech stocks.
- Rebalancing involves selling high-performing assets and buying underperforming ones to reduce risk.
- Those with target-date or managed accounts likely have automatic rebalancing.
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