By Xavier Brenner It's December and it won't be long before the Times Square Ball drops and marks the end of 2014. Before you completely check out for year-end holiday festivities, do yourself a favor and take a serious year-end look at your personal finances. With a little bit of focus and attentiveness, you should be able to work your way through a punch list of essential tasks during the first half of the month.Here's a quick checklist of that will help guide you.
Take a cool and dispassionate look at your portfolio. Are there stocks with big losses you are planning to dump in 2015? If you're planning to sell the better performing stocks to realize capital gains, consider selling before the end of year to "harvest" tax losses. Tax loss harvesting can be an an effective way to minimize your tax hit. There are risks, though, so consult with your financial adviser or a certified public accountant before employing this strategy in a big way.
It's time to truth-test your investments. Do you have the right lineup for a more volatile market, higher geopolitical risk, growth risks in the Eurozone, China and Japan, and lower commodity prices? Now that the year is winding down, it may be an opportune time to consider where the vulnerabilities are in your portfolio. Time for more defensive positions with high dividend yields? How exposed are your key holdings to the depressed energy prices. Take a deep dive into your year-end statement. Which stocks are lagging and why. Is the overall portfolio diversified enough?
Time is running out to max out on your contributions to your 401(k) or an IRA to save on a tax-deferred basis and lower your 2014 tax bill, now is the time.