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Professionals Offer Year-End Advice On Finances, Investments

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December 3, 2015

by Robert Kimmel  

With the end of 2015 approaching, it’s time to take a thorough look at your financial status, according to those who deal daily with banking and investment. There are a number of actions to consider before year’s end as recommended by knowledgeable professionals.

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Creating an emergency fund is advocated by both Jean Kim Sears of the investment firm, Edward Jones in Irvington, and Gary Solomon, Assistant Vice President and Branch Manager of Tompkins Mahopac Bank in Sleepy Hollow.

“You’d like to have between six and 12 months’ worth of living expenses in such a fund,” Sears suggested, “in order to pay for unexpected costs, such as a new furnace, major car repair, or a big medical bill. For this, your money should go into a low-risk, liquid account.”

“Don’t overspend this holiday season,” cautioned Solomon. It is not uncommon that a cycle of holiday overspending can leave some with debt that burdens them through the coming year. And, according to Solomon, it is a good time to, “Review this past year’s spending, plan your 2016 budget, and include an automatic savings plan. He added, “Give to charities.” While most charitable giving is made with altruistic motivations, it also worthwhile to keep in mind that donations made before the end of the year may help lower your taxes.

On the tax subject, Sears noted that people with investments that have lost value should, “Consider tax-loss selling. Generally speaking, it’s a good idea to hold these investments if they still meet your needs, but if you do decide to sell them, you can use the loss to offset capital gains taxes on investments you’ve sold that have appreciated,” she stated. Sears continued that, “If the loss from the sale was greater than your combined long- and short-term capital gains, you can deduct up to $3,000 against other income. And if your losses exceed your capital gains by more than $3,000, you can carry the remaining losses forward to future tax years,”

If you have a 401(K), it may be time to “Boost your contributions,” Sears said. “Ask your employer if you still have time to add more to your 401(k) before the year ends. If not, at least increase your contributions in 2016, especially if your salary goes up.” Another action suggested by Sears is to “Review your asset allocation, that is your investment mix, to make sure it is “still appropriate for your time horizon and goals. You might consider being a bit more aggressive if you’re not meeting your financial targets, or more conservative if you’re getting closer to retirement.”

Sears also explained that, “Diversifying your portfolio may help reduce the impact of volatility; however, diversification, by itself, can’t guarantee a profit or protect against loss. If you do need to adjust, or ‘rebalance,’ you can do so fairly easily in tax-deferred accounts, such as your IRA or 401(k) – but for those investments held in a taxable account, you should talk to your tax advisor on how to manage the tax consequences of rebalancing.”

Timothy Sullivan, President of Sunnyside Federal in Irvington, stated that executing a Roth IRA conversion is a planning move to consider for retirement. However, he noted that, “You must have the account for five years and be at least 59 1/2 years old to take totally tax free withdrawals, but any conversion in 2015 gets a January 1, 2015 start date for the five year requirement. Your wait may actually be only a bit more than four years if you make the conversion before year-end,” Sullivan said.

“Review service policies, financial and bank statements, for the best pricing and hidden fees,” Solomon suggested. And he adds that it is important to, “Know your credit score. And, review your retirement and investment strategies with a professional.”

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