As 2024 comes to a close, it’s time to take control of your money and set yourself up for an even better 2025. Whether you’re looking to rebalance your investments, boost savings, or minimize taxes, HerMoney CEO Jean Chatzky shares nine actionable steps to take before the year ends.
Rebalance Your Portfolio
It’s no surprise that the stock market has been on a tear this year, and shows no signs of slowing in early 2025. That’s why Jean Chatzky’s number one money move to make before the end of the year is to rebalance your investment portfolio.
“When the markets move so far, so fast, you are probably taking more risk than you expected to take unless you rebalance,” says Chatzky. “You need to readjust your portfolio and bring it back down so that if, and when, the markets do turn tail you are not going to lose too much.”
Wondering what the heck rebalancing your portfolio means and how to decide when it’s time to sell a stock? We’re always discussing the topic in our Investing club, InvestingFixx, every other Monday night on Zoom. Join us!
Make Your Cash Work For You
The average bank savings account is paying a little over four-tenths of one percent in interest…you can do better than that. If you shop around, you can still find high-yield savings accounts that are paying ten times that, in the four percent range. So, if your savings are sitting in a standard account earning next to nothing, It’s time to lock in high-yield interest rates before they drop.
Don’t need your cash for a few years? Jean Chatzky also recommends putting your money into a CD or a nonretirement annuity. “You can find one-year CDs at 4.65 percent. You can find two-year CDs paying just a little bit less than that. You can even find three-year minimum term nonretirement annuities that are paying 5.5%,” Chatzky says.
Take Your RMDs
If you are 73 years old or older, this is your reminder to take your Required Minimum Distributions (RMDs) from your retirement accounts before the end of the year. One exception to this rule: if this is your first RMD, you have until April to take it.
“If you’re not clear on the amounts, your tax advisor can help you, or tax software can help you, but you want to get this right because penalties for not taking your RMDs are 25 percent of the amount that you should have taken,” Chatzky says. “That is serious money.”
Consider A Roth Conversion
Why do Roth conversions before the end of the year? They can help lower future tax burdens and grow your income tax-free for starters. But, there’s a little less pressure to do them before the end of this year. That’s because with President-elect Trump taking office in January, the 2017 Tax Cuts and Jobs Act isn’t going anywhere soon.
“It’s very likely that those lower tax brackets are here to stay. They may even be made permanent,” Chatzky says. “But Roth conversions can still make a lot of sense for people who want to either shrink RMDs in the future or leave their retirement account to their heirs.”
Update Your Beneficiaries
If it’s been a while since you looked at the beneficiaries you named on your insurance policies and your retirement accounts, it’s time to do it now. Why? Retirement accounts and insurance policies have beneficiary designations that override a will.
And if you’ve experienced major life changes, such as marriage, divorce, death, or birth, you’ll need to update your beneficiaries. Bonus tip: “You want to make sure that you’ve also named successors for those beneficiaries,” Chatzky says.
Annual Gifting: Give Now, Not Later
No, we’re not talking about charitable gifting (although that’s never a bad idea). “When I say gifting, I’m talking about annual gifting,” Chatzky says. “Or using up your ability to give some of your money to your heirs now, while you’re alive, rather than at death.”
A great question to ask yourself if you should be doing this now rather than later is: Will your money help the people that you want to help more during your life than at your death? Maybe it could help them buy a house or a car now when they’re in their 20s or 30s rather than later when they are more financially secure.
Max Out 529 Contributions
Most states allow you to take a tax deduction each year for contributing to a state-sponsored college savings plan, so now’s the time to beef up your 529 contributions. “Typically you have to contribute, to your own state’s plan in order to qualify for this and your contributions grow tax-free. They can be withdrawn without paying additional taxes as long as they’re used for qualified educational purposes,” Chatzky says.
Another bonus? Thanks to the SECURE Act, there’s a provision that up to $35,000 can be rolled over to a Roth IRA in that same child’s name if they decide they don’t want to go to college.
Harvest Your Tax Losses
“Lest you think that stocks have not lost money this year, there are plenty of stocks that have lost plenty of money,” Chatzky says.
Tax loss harvesting is when you sell losing stocks in your portfolio or losing investments to offset any gains that you’ve taken — any capital gains, liabilities, plus up to $3,000 in ordinary income. Check out a list of the top 10 losing stocks of the year here and see if you have any in your portfolio. Hint: This may be your sign to sell.
Get Financially Organized
Looking to set yourself up for more financial success in 2025? Join the next session of Jean Chatzky’s money makeover program, FinanceFixx.
FinanceFixx is perfect for anyone who wants to create a budget, refresh an existing one, or find extra savings for a big money goal like retirement. Our next session, specifically for pre-retirees, kicks off on January 8th. Sign up today using code HOLIDAY for $100 off. Let’s make 2025 your strongest financial year yet!
More On Hermoney:
- 8 Questions To Ask When Evaluating The Best Stocks To Buy Right Now
- How She Does It Podcast Episode 19: Invest Like A Woman With Nancy Tengler
- How To Start Investing If You Have $1000 (Or Less)
More money news when you need it! Get the latest and greatest updates on all things investing, budgeting, and making money. Subscribe to the HerMoney newsletter at Hermoney.com/subscribe!
