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End-of-Year Investment Planning

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There are two important items in your portfolios that are worth noting as the year ends. For some, it’s worth making those certain changes as well. 

Firstly, this has been a very negative year for most equity investors. 

The only two positive sectors were Energy and Commodities. If you are like most growth-oriented Americans, you felt the downward pinch from companies in the Tech Sector or related to it. Some tech companies are down this year by as much as 60% with names that we are all too familiar with. Even most bond funds and Income Portfolios are down by as much as 10%, with one bright spot being the Ultra-Short-Term Sector.

Secondly, you can take financial advantage of your losses.

Your call to action here is with investors with taxable accounts (non-IRAs). This is the time of year to take advantage of your actual losses and harvest them. We call this “Tax Harvesting.”  By selling your “losers” and waiting thirty days, you will create taxable losses for your 2022 income tax filing. So, you can turn a negative into a positive by lowering your taxes this year.

Thirdly, this is a great time to review your portfolio and ensure it is appropriately positioned for 2023. 

We have been doing this for the last six months. A reminder here that the US Equity Markets are generally six to nine months ahead of the economy. That means if you are a bullish person (versus bearish and negative) you may believe that most of the bad news has already been heard on the street. In that case, this recession will be short and temporary.  If so, then somewhere in mid-2023 there will be a major rebound. 

You want to be in a position to take advantage of this. If you are a bearish investor, then make sure you have enough high-quality dividend-paying holdings and short-term bonds in your portfolio. And of course, there is the blending of these.

December and January are great times to meet, review your portfolios (even by Zoom), reposition for 2023, and make sure you are on track to meet your financial goals. We are here to help you, even to identify these goals.

Expert Insights

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