2024 is rapidly drawing to an end, but no worry, you still have time to finish this year strong with the following financial moves.
Rebalancing Your Portfolio
Investing can be an excellent way to build wealth and secure your financial future, and for those in their 50s or 60s, it’s crucial to take advantage of this time to grow your nest egg and prepare for retirement.
As your portfolios grow, especially after the recent US stock market bull run, and a booming real estate market, your investment portfolio have most likely deviated from your target asset allocation. In the short term, this may increase your overall net worth; in the medium or long term, however, it can increase your investment risk and jeopardize your financial goals. That’s why we need to rebalance our portfolio to manage risk, and maintain our target asset allocation.
What is portfolio rebalancing? Essentially, it is a process of selling some assets in your portfolio and buying others. A word of caution: as selling appreciated assets could have some tax consequences, I highly encourage our readers consult a financial professional before doing this.
Investing in This Triple Tax Saving Vehicle
Have you taken advantage of this triple tax saving vehicle called Health Savings Account (HSA) to slash your income taxes? With HSA you can make pretax contributions, enjoy tax-free compounding, and take tax-free withdrawls to pay qualified healthcare expenses.
If you use HSA as an investment vehicle, a cardinal rule is that you use non-HSA money to cover healthcare expenses, letting the assets inside the HSA enjoy tax-advantaged growth.
So, if you or your family are on high deductible, high premium health insurance plan this year, you still have time to contribute pretax money of $4150 for individuals, or $8300 for family plans to your HSA. For those 55 and older, you can contribute additional $1000.
Doing Good While Saving Money
Money is a means to an end, not the end itself. It’s just one of the tools we use to enrich our lives and the lives of those we care about. As we navigate through 2024 toward the end of it, the art of giving smartly takes center stage, emphasizing not just generosity but also strategic planning. Here are essential tips to help individuals maximize the effectiveness of their charitable contributions this year.
Begin by reflecting on causes or issues that resonate deeply with you. Then, conduct thorough research on charitable organizations and initiatives. Websites like Charity Navigator, GuideStar, and GiveWell provide insights into an organization’s performance and credibility.
Plan ahead and understand the tax implications of your charitable contributions. Strategic planning, such as bundling donations into specific tax years or leveraging donor-advised funds, can maximize tax benefits while supporting charitable causes.
Beyond monetary donations, consider alternative forms of giving. Volunteer your time and skills to support causes you care about. Donating goods, assets, or securities can also be impactful and tax-efficient strategies for giving.
However, the suitability and/or effectiveness of tax-efficient giving strategy is not one size fits all. All these strategies are highly dependent on each individual’s overall financial situation. So, don’t let the tail of “tax saving” wag the dog of “your doing good intentions.” If you are unsure about which giving strategy to choose, do your diligence or seek professional help. As you embark on your philanthropic journey, remember that every thoughtful contribution, no matter the size, contributes to a brighter and more compassionate future.