Offset your impulsive trades you made through Reddit threads, group chats, and TikTok financial advice. This is one area – of many – where you can improve your finances. The December financial tips will help you wrap up 2025 over the next few weeks.
Tax Loss Harvesting
This is a fancy word for when you use investment losses to reduce your taxes. A few investments, trades, or speculations may have not gone your way. You can use these money losing ideas to offset some of the gains in your portfolio.
Sell winners and losers by December 31st, so the gains and losses offset. When April 15th rolls around, you probably won’t remember doing this, but you’ll have a lower tax bill.
Adjusting Your Target Investment Selection
Over the course of the year certain investments perform better than others. You may be uncomfortable with a lot of money invested in certain areas.
For example, you target 20% of your cash for tech but it’s a lot higher – 30% – from such great performance. You sell off the 10% of tech and spread it around to other investments that are appropriate for you.
You can move around your portfolio while selling off winners and losers. It’s a wonderful exercise.
Take it to the Limit
For retirement accounts like 401(k)’s and IRAs, top them off before December. They are wonderful ways to save for retirement as well as reduce your tax burden.
The highest amount you can contribute is $23,500 to a 401(k) and $7,000 to an IRA.
Don’t Forget the Kids
Fund college for your kids with 529 Plans. There are many benefits. You can contribute up to $19K per person or $38K per married couple for each beneficiary.
The funds can be used for international and domestic universities. Also, you can use these funds to pay for K-12 expenses up to $10K per year.
Finally, in the state of New York, you get a state tax break for funding up to $10K, married filing jointly, in a 529 plan. Other states have different amounts of tax breaks. The funding deadline for most states is December 31st.
Setting It Up for Next Year
In the never-ending world of busyness you’ll map out next year’s financial future despite having a vague memory of where your money actually went this year. If you want to discuss December financial tips and planning for next year – make it a December to remember – give me a call.