Q: Given current uncertainties surrounding the pandemic, the economy and the government’s response, is it still a good idea to do year-end financial planning?
A: It has been proven over time to be worth your while to update your financial plan to refocus on the future and revisit your long-term goals.
Here is a year-end financial checklist, 2020 style, to help you:
- Put extra savings to work. Consider maxing out your 401k, IRA, or use the money to pay the tax on a Roth IRA conversion. Further, refinancing your mortgage or paying down debt are also strategic alternatives.
- Review your benefit choices and 2021 contributions for open enrollment.
- Diversify or reallocate your investments in a tax-efficient way. Selling an investment that has lost value in your portfolio to realize losses for tax purposes can offset taxable gains and potentially even reduce ordinary income.
- Don’t involve emotions in your financial decisions. It’s easy to overestimate how much change is possible in the first year of any presidential term, especially for things that can hit you squarely in the wallet, like taxes, retirement rules or health care. Remain focused on your strategy.
- The markets tend to go up whether there is a Democrat or a Republican in the White House. When adjusted for inflation, the Dow Jones Industrial Average has gained an average of 3.8% annually under Democrats since 1900, versus 1.1% under Republicans. A good rule to follow is don’t try to time the market, but the more time you spend in the market, the higher probability you will be happy with your investments.
Consider sitting down with an Alpine Bank Wealth Management officer and opening an investment account. Contact Matt Michalski to learn what Alpine Bank Wealth Management can do for you. He can be reached at (970) 245-5627 or [email protected].
Products of our Wealth Management service are not FDIC insured, may lose value and are not bank guaranteed.