Time to think about year-end investment moves

REGION – We’ve still got a couple of months left in 2018, but it’s not too soon to start thinking about some year-end investment moves that might benefit you. Although not all will apply to your situation, here are a few possibilities:

Add to your IRA

For the 2018 tax year, you can put up to $5,500 into your traditional or Roth IRA, or $6,500 if you’re 50 or older. If you haven’t reached this limit, consider adding some money. You have until April 15, 2019 to contribute to your IRA for 2018, but why wait until the last minute?

Increase your 401(k) contributions

You already may be investing in your 401(k) or similar employer-sponsored retirement plan, but you might be able to bump up your contributions for the rest of the year if it’s allowed. Of course, you should always put in enough to earn your employer’s matching contribution if one is offered.

Take your RMDs

If you are 70-and-a-half or older, you must start taking withdrawals – called required minimum distributions, or RMDs – from your traditional IRA and your 401(k) or similar retirement plan. Generally, you must take these RMDs by Dec. 31 every year. But if you turned 70-and-half in 2018, you can wait until April 1, 2019, until you take your first RMD. However, you will then have to take a second RMD –the one for age 71 – by Dec. 31, 2019. Taking two RMDs in one year could give you an unexpectedly large taxable income for the year, possibly bumping you into a higher tax bracket and affecting the amount of your Social Security benefits subject to taxes. So, if you are considering delaying your first RMD, consult with your tax advisor.

Make changes in response to life events

In 2018, did you experience a major life event, such as a marriage, divorce, or addition of a child? Or did you change jobs or retire? Any of these events could lead you to adjust your investment plans, so now may be the time to do so, possibly with the help of a financial professional.

Review your investment mix

At least once a year, it’s a good idea to review your investment mix to ensure it’s still suitable for your goals and risk tolerance. Sometimes, even without your taking any action, your portfolio might change in ways you hadn’t expected. For example, suppose you wanted your portfolio to contain 60 percent stocks and 40 percent bonds and other investments. After a period of rising prices, though, the value of your stocks may have increased so much that they now occupy 65 percent of your portfolio – which means you may be taking on more risk than you had originally intended. Consequently, you may need to rebalance your portfolio to get back to your original 60 percent to 40 percent ratios. Keep in mind that these figures are just for illustration; everyone’s ideal portfolio mix will depend on their individual situations.

These aren’t the only year-end moves you may want to consider, but they can help you close out 2018 on a positive note. Plus, they can serve as a reminder that you need to be vigilant as you keep working toward your financial goals.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

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