Tips for end-of-year financial planning

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Review Your Taxable Investment Accounts for Gains or Losses

If you have losses, take advantage of the government’s subsidy by selling the losers. You get to reduce any capital gains for the year by the losses, and if you have any remaining net losses, they can be used to reduce your taxable income by up to $3,000. But be careful: you must wait 30 days after the sale to buy back the same or “substantially identical” security if you want to take a loss for that year.

When deciding what to sell, look at your overall asset allocation and use this opportunity to rebalance your portfolio. Asset allocation works best with occasional rebalancing, since not all assets move at the same rate or in the same direction. If you do not have a plan, now is a great time to build a sensible allocation, based on your goals, objectives, and risk tolerance.

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