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Five Financial Moves to Consider Before the End of the Year

investing-my-money | Read Time: 3 minutes

By Charles O. Posnecker, IV, CFA, CTFA | Published: November 2020


Annual financial check-ups are as important as annual physicals at your doctor’s office. Life gets busy and it is easy to put these things off. It is important to your financial well-being to make sure you review your investments and goals at least annually so that there are no surprises along the way. Here are five simple things you can do before year-end to help you stay on track.

Maximizing Retirement Accounts
If you have an employer-sponsored retirement plan, be sure that you are contributing at least enough to receive a company match, as this is essentially “free money” to you. Next, be sure that you are contributing as much as you can to fund either a Traditional or Roth IRA. Even small amounts help, as the accounts will grow tax-free, and you may get a deduction. The earlier you start to contribute, the longer you allow compound interest to prove itself as “the most powerful force in the universe.”

Reviewing Beneficiary and Estate Documents
A common assumption is that your will or trust will dictate how IRA and other retirement funds are distributed upon your death, but whoever is listed as the beneficiary will be the recipient. Check your retirement accounts to be sure that the appropriate individuals are named as beneficiaries to avoid future headaches. Also, take the time to look over any estate planning documents to be sure they are current. A new child, a divorce, a death in the family or some other life event merits checking to see that your will, your trust and any powers of attorney are up to date.

Rebalancing Accounts
Part of your overall financial plan is determining an appropriate asset mix of stocks, bonds and other investments. As time passes, some of these asset classes will do better than others. At least annually, take a bird’s-eye view of your asset mix to see if any rebalancing is needed. For example, if stocks have moved up significantly, think about cashing in some of the gains and reinvesting elsewhere to remain in line with your original plan. Doing so may also safeguard your portfolio from unexpected volatility.

Tax-Loss Harvesting
If you have realized capital gains over the year, review your holdings to see if you have anything at a loss. It may be wise to sell that holding, i.e., realizing a capital loss, to offset the gain and reduce any taxes owed. You can always repurchase the same holding in 31 days or alternatively buy a similar security immediately. Tax losses may also be carried forward to future years to offset future profits.

Short-Term Cash Flow Needs
This year has emphasized the importance of an emergency fund for many people. A general rule of thumb is keeping at least 3-6 months of your monthly expenses set aside in a savings or money market account. Further, if you anticipate a large cash outlay in next 1-2 years (e.g., for a house down payment), then a reserve is especially important and not something you want to subject to market risk. While the stock market historically trends upwards, eventual corrections are inevitable, and you do not want to be stuck selling in a down market.

Ensuring that you are on target today will pay countless dividends in the future. Meeting with a financial advisor to discuss your financial situation can help put your mind at ease and let you focus on more important things this upcoming holiday season, like friends and family.

About the Author – Charles O. Posnecker, IV, CFA, CTFA
Chuck Posnecker joined Cypress Capital Management in 2017 after working for Christiana Trust, a division of WSFS Bank, for 12 years in their personal trust and investment groups. He graduated from the University of Nevada, Las Vegas, where he received his BSBA in International Business (2002) and MBA-Finance concentration (2005). Chuck is also a graduate of the Pennsylvania Bankers Association School of Trust, Investments & Relationship Management, where he completed a three-year program focused on various aspects of trust administration and investments. Chuck obtained his Certified Trust & Financial Advisor designation in 2011 and his Chartered Financial Analyst designation in 2016.


This article is provided by Cypress Capital Management, LLC ("Cypress" or the "Firm") for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. No portion of this commentary is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Certain information contained in this presentation is derived from sources that Cypress believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.

Cypress is an SEC registered investment adviser that maintains a principal place of business in the Greenville, Delaware. The Firm may only transact business in those states in which it is notice filed or qualifies for a corresponding exemption from registration requirements. For more information about Cypress’ registration status and business operations, please consult the Firm’s Form ADV disclosure documents, the most recent versions of which are available on the SEC’s Investment Adviser Public Disclosure website at Cypress is wholly owned by WSFS Financial Corporation.

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