Top 5 End-of-Year Investment Tips


Quick: What can you do right now to maximize your investments and minimize your tax burden at the end of 2019? Here are a few ideas:


Look at the big picture

Review your portfolio, and determine whether you need to rebalance anything. Your life circumstances, goals, age, and other factors may suggest a need to switch to more or less aggressive investments, for increased returns or greater security. Talk to your financial adviser at Horizon Bank for help.


Consider diversifying

Maybe you’ve avoided a particular investment due to its value. Or perhaps you need to add something to your portfolio that trends more (or less) closely with market conditions.

A lot can change in the course of a year, and you may find that now is a good time to change your mind about certain types of assets. You can make new choices, if it makes sense, as part of your annual portfolio review.


Think about your tax bracket

As you consider making changes, keep in mind how long you’ve owned each investment. Assets that you’ve had for only a year or less will generate short-term capital gains, which will be taxed as ordinary income.

Depending on your tax bracket, this ordinary income rate could be higher than that of your long-term capital gains rate. You may find similar issues regarding certain stock dividends, too. That means you may be better off holding onto certain assets in order to minimize your tax over time.

Reminder:Other guidelines apply for how soon you can re-purchase certain types of assets after selling them off – so discuss these details with your tax adviser, too!

Offsetting taxes

If this year brought you capital gains from profits off of selling securities, and you haven’t carried tax losses forward from previous years, you can offset some or all of the taxes on those gains. You can do this by selling others that have lost money throughout the year. Any loss amounts over and above the amount of your gains can offset up to $3,000 of ordinary income – or you can carry it forward to reduce taxes in the future.

Decide whether tax-advantaged accounts are right for you

For some investments – like municipal bonds that are already tax-free – there’s no additional tax benefit by placing these in a tax-deferred account, such as a 401(k). On the other hand, actively traded mutual funds which generate a lot of short-term capital gains, may in fact be better off in an account that will help defer taxes on those gains. Your adviser can help you determine which approach may provide the best outcomes for your unique situation.


Looking for help?
There’s still time to get Sensible Advice from Horizon Bank. Contact us or stop by your local branch, and we’ll connect you with a knowledgeable adviser who can help you address these issues and others, to end this year on the right financial note.