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9-Year End Money Moves To Make Now

By Richard Rosso | December 6, 2017

, 9-Year End Money Moves To Make Now

The week after Christmas begins with thoughts of lofty resolutions dancing around in our heads along with high expectations for success through the new year. There lies the great opportunity to settle in and take several financial actions that jump starts 2018 on solid fiscal footing.

Clean house.

Consider tax-loss selling where underperforming or losing investments are sold in brokerage in non-IRA accounts. Capital losses that are realized can be used to offset long and short-term capital gains or reduce ordinary taxable income by a maximum of $3,000 a year if gains aren’t achievable.

Losses not used against gains or income may be carried forward to future tax years; make sure to keep track of them. A smart idea is to inform your financial adviser or partner so that he or she may track and utilize losses accordingly.

Mutual fund investors will likely realize record capital gains for 2017 which makes scrutiny of losses to offset gains an important financial move by year end.

Realign to your original portfolio target.

So, you’ve allowed stocks in your portfolio to run year to date on momentum of tax-reform hopes, a somewhat dovish Fed and a solid synchronized global growth story? Well, good for you. Now, do your wealth a favor for 2018 and manage risk accordingly by taking profits, thus reducing your allocation to stocks to where they were last December.

At the least, your portfolio should be rebalanced to a neutral point where risk is in line with your emotional makeup or gut. And it’s fine to maintain the proceeds in cash or a short-term bond option. If anything, your weighting to fixed income probably requires a fresh look and additional investment. No, bonds are not dead.

Read: Bond Bears and Why Rates Won’t Rise.

Profit-taking this year may be especially prescient as the Senate tax bill has introduced a “FIFO mandate,” or first-in-first-out edict where retail investors (institutional is excluded), must sell their oldest shares first which most likely possess the lowest cost basis.

Ostensibly, unlike today where a retail investor can identify specific lots to sell, preferably the ones with the highest cost basis (and lowest capital gain tax liability), the Senate proposal would punish retail investors with heavier tax burdens by forcing them to sell the most profitable shares first.

The mandate has potential to alter behavior; retail investors may be hesitant to sell to avoid greater tax burdens. Thankfully, the mandatory FIFO provision is not included in the bill passed by the House Of Representatives.

Stash cash virtually.

Still stashing emergency cash in an outdated brick & mortar bank? Spend at most, 10 minutes online, to open a high-yield savings account with an FDIC-insured virtual bank like Due to lower overhead costs, savings and CD rates at online banks are anywhere from 50-65% higher than their outdated walk-in brethren. Worried about customer service? Don’t be. A chat feature and 800 number are available to communicate with bank representatives.

Make it a habit to transfer extra cash from your current institution to a new virtual choice. It’s easy to establish an electronic connection and easily move cash between them.

Drop a liability.

You may be surprised by the number of stealth monthly charges that hit your credit card accounts. It happened to me recently. After going through a paper credit card statement, I realized I’ve been auto-subscribed to a periodical I haven’t read in well over a year. Ostensibly, I racked up over $200 in charges.

If it happened to me, it can happen to you, too. Every year I go through and cut a recurring charge for a service I don’t use often enough to warrant the cost. This year it’s Netflix for me. What is it for you?

Drop me an e-mail and let me know what you cut, and why, and I’ll discuss it on the Real Investment Advice radio hour (anonymously, of course.)

Give yourself credit that pays you to use it.

If you’re going to use credit, consider cash back.

If you’re above average managing credit and paying off balances monthly, step up to cash-back rewards. Why not? Several issuers offer 5% cash back on everyday purchases like groceries, gas and restaurants.

Cards may charge annual fees ranging from $39 to $95 a month. However, if you spend $30-$65 a week on groceries or gas, you’ll more than make up for them.

Check out Nerdwallet’s list of best cash-back cards for a thorough review of issuers and pros, cons of each.

Bolster the “pay yourself first,” mantra.

Program yourself to pay yourself before everything else. Proactively adjust household expenditures so that company retirement and or emergency savings accounts are funded first. Payroll deductions or some form of automatic deposit feature make it easy to create and stick with an aggressive saving and investment program.

Make an initial bold move. A financial leap of faith: Take a step to super-saver status and immediately increase your retirement payroll deduction to 15%. Don’t even think about it, just do it. Before consideration to your household spending.

Micro-track expenses for the month of January after the new deduction is in effect. Adjust spending to meet the new, increased deduction. Then work on the necessary cuts to expenses to continue the 15% or possibly adjust even higher, to 20%.

My thought is you’ll be amazed to see how quickly the change is accepted and the impact minimal to the quality of life. I’ve witnessed how this action alters thinking to attach good feelings and reward to savings vs. spending.

Get a portfolio health assessment.

How much thought have you given to your overall portfolio allocation to stocks vs. bonds and cash? For example, many contribute to their company retirement accounts and ignore how their money is invested over time, or fully understand investment choices available.

The last week of December is perfect to meet with a financial professional, preferably a fiduciary, to assess the current risk in your portfolio vs. future return prospects.

Keep in mind, the stock market has appreciated 35% since 2014 while reported earnings growth has risen by a mere 2% through the same period. Sooner or later, this extreme premium in stock prices will work off through correction or long periods of much lower than average returns. Hey, it’s math and eventually math prevails over emotion.

Prep a reading list (include Real Investment Advice Survival Guides and blog).

My 2018 book choices are listed, purchased and ready to go! Need some ideas of seminal books or “must reads,” on the topic of finance? Click here for my personal favorites. I refer to at least one of these tomes annually. My 2018 choices include Richard Reeves’ Dream Hoarders and Ray Dalio’s Principles: Life and Work.

At, there are several Financial Survival Guides available free for download. From questions you must ask when interviewing a financial adviser to investment and planning rules, these guides were created to help investors and savers make the most of their money.

Our latest Guide, “The Real Investment Advice Investing Manifesto,” is a Roberts & Rosso creation, suitable for framing or display, that outlines our financial philosophy in a creative, aesthetically-pleasing format.

Flip your money script.

According to Brad T. Klontz, Psy.D., CFP® & Sonya L. Britt, Ph.D., CFP®, money scripts as coined by Brad and Ted Klontz, are the core beliefs about money that drive ongoing behavior. Money scripts are unconscious beliefs about money formed in childhood, passed down from generations.

They may develop in response to an emotional charge or impact such as parental abandonment, devastating macroeconomic episodes like the Great Depression and the lingering impact of significant financial losses. I’ll add lack or volatility of household financial security. Also, I’ll add embarrassment to the list. As I pre-teen it was embarrassing for me to use food stamps when purchasing groceries for my tiny household.

So, what is your money script? How was it formed? How are you wired? Have you thought about it?

If you possess negative money habits, writing and exposing them consciously will help you to change them. Engage the assistance of a spouse, close friend or objective financial professional to rewire how you perceive money and keep you on track.

Financial changes don’t need to be difficult. Simple moves as outlined can prepare you for a fiscally strong 2018.

Talk with an Advisor & Planner Today!


Richard Rosso, MS, CFP, CIMA is the Head of Financial Planning for RIA Advisors. He is also a contributing editor to the “Real Investment Advice” website and published author of “Random Thoughts Of A Money Muse.”  Follow Richard on Twitter
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