Millions of Americans make New Year’s resolutions every year. If you’re among them, don’t overlook the importance of taking stock of your investments before 2019 gives way to 2020. Here we discuss several possibilities for year-end investments which you may not have previously considered.
Be Sure to Maximize Your Retirement Contributions
The Internal Revenue Service (IRS) offers several opportunities for setting aside money for retirement on a pre-tax or post-tax basis. The employer-sponsored 401(k) is just one example of a popular retirement savings program all people should take advantage of if it’s available to them. With the 401(k), you can invest up to $18,500 of your gross salary towards retirement automatically with every paycheck.
Many employers also offer matches between 50 and 100 percent to encourage their employees to save. It truly is like getting free money. With the year closing out shortly, now is a great time to ensure that you’re setting aside as much as you can. Some other investment options to consider exploring before year-end include:
- Health Savings Account: If you have a high deductible health insurance plan, you can obtain an HSA through an employer or on your own. If you don’t use all the tax-free dollars you set aside, the IRS allows you to invest it tax-free.
- Independent Retirement Account (IRA): This can be an ideal option if you’re self-employed or have already maxed out your 401(k) contributions for the year. You have until April 15, 2020 to invest up to $6,000 on a pre-tax basis or $7,000 if you’re over age 50.
Look at Your Current Asset Allocation
There’s no question that choosing the right mix of stocks, bonds, and other investments is one of the most important things you can do for your financial portfolio. However, it’s just as essential to review your asset allocation regularly to make sure the mix is still working well for you. You might even discover that it would be a good idea to make new year-end investments. If you’re just not sure where to start, an advisor from Aura Wealth Management can help.
See if Tax Loss Harvesting Applies to You
If you have lost money on investments in 2019, it may be worthwhile to sell them at a loss and reinvest the money into a similar but more profitable investment. Known as tax loss harvesting, this process allows you to offset your capital losses on investment income to reduce the amount of taxes you will owe when you file your 2019 return. The IRS allows you to deduct up to $3,000 against your income if you had more capital losses than capital gains this year.
Need More Advice on Year-End Investments?
At Aura Wealth Advisors, we understand that it can feel overwhelming to consider all your investment options this time of year. We invite you to contact us to learn more about our services or to request an initial consultation.