Four Investor To-Dos Before the Ball Drops on 2015

Investors should consider four key questions for a year-end portfolio view, including portfolio rebalancing and retirement contributions.
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The end of the year is always a good time for a personal reality check, not to mention a portfolio check.

It’s been an eventful year, as usual. The American economy forged ahead and the U.S. equity market extended its bull run. Now, what about your year-in-review as an individual investor? Let’s pose the question this way: Fast-forward 12 months and pretend you’re taking stock on your 2015 – did you hit your targets? What might you have done differently?

Here’re four key tasks to consider before we flip the calendar. Most of these can be accomplished quickly, but could make a big difference over a lifetime. 

Rebalancing Act

This refers to the periodic process of realigning dollar weightings of a portfolio’s assets, buying this and selling that to maintain a desired allocation target – say, 50% stocks and 50% bonds. Rebalancing is crucial to the long-term health of a portfolio.

It can also be psychologically difficult, because it may involve saying good-bye to some top performers and potentially adding assets that may not appear all that stellar at the moment. Still, selling strength and buying weakness is an underlying principle of investing for many. Furthermore, if you have a taxable account, you might look for opportunities to “harvest” losses on the weakest of the weak to offset any gains you lock in.

New Year’s Investment Thesis

They call economics the “dismal” science for a reason. It’s generally thankless and hard to do. But guess what – you’re probably your own best economist. Take a look all around you and get a sense of what’s going on. Formulate your own point of view on the direction of interest rates, home sales or anything else that comes to mind.

Smart folks at the Federal Reserve and on Wall Street are watching folks like you, at the ground level – aka Main Street USA. Weigh this against other information you can find and you can sketch out an investment thesis for the next year or so. Then come back to this later, over and over, and see how your forecast is holding up.

Review Retirement Contributions

At this point, it’s probably too late to make a paycheck contribution to an employer 401(k) plan. Still, you have until April 15 to make an Individual Retirement Account contribution for this year. If you’re scrambling for another deduction or are behind on your retirement goal, maximizing your retirement contributions is an option.

Check with the IRS for information on contribution limits, and, if applicable, don’t forget your spouse’s IRA either.

Donate to Charity

Let’s face it, it can be an effective tax deduction. But let’s also remember that many people are struggling. The need for charity is endless and there are many qualified organizations that provide valuable assistance.

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