It’s official: we made it through the holidays, and the new year is upon us. And if you’ve been following the blog, you’ve already set yourself up for smooth financial sailing in 2019, thanks to our year-end suggestions. But now that the champagne has been popped (and the buzz has long since worn off), there’s still some planning to be done to ensure you’re in the position you want to be by this time next year. The good news is, it’s not too difficult! Here are five first-quarter money moves to decrease your stress levels and maximize your returns in the new year.
1. Got Extra Cash? Invest it!
The first quarter is the right time to review your budget and see exactly where your money went… including how much of it you have left over.
And if you do have leftovers, now may just be the perfect time to invest it — especially given the market pullback we saw at the end of 2018. Those relatively low stock prices mean it’s a buyer’s market.
Don’t forget about your retirement accounts, as well; you have until April 15 to max out your contributions for 2018. If you’ve got a 401(k), the 2018 contribution limit is $18,500; IRAs max out at $5,500. Both caps will increase in 2019, by the way, to $19,000 and $6,000 respectively.
2. Review and Rebalance Your Assets
While it’s a fool’s errand to try to time the market, it’s important to take a second to review your portfolio every once in a while, and at least on a yearly basis. It’s not about responding to the sensationalized media constantly predicting a major downfall — it’s about making necessary adjustments to keep your investment strategy current.
Of course, we’re happy to address specific questions you might have regarding how to best allocate those assets, as well as making a specific plan about your future cash-flow needs. Just reach out so we can schedule a face-to-face meeting or video chat and get you set up to weather 2019’s fluctuations.
3. Got a Trust? You Might Need One
If you’ve got kids, a trust is pretty much a must. It’s one of the most reliable ways to pass on your assets to heirs in a way that ensures you maintain control throughout your lifetime, and it can also help protect your estate.
Already got a trust? Now’s the time to consider adding a corporate trustee to your estate plan. But don’t use a bank! Our best suggestion is to seek out an independent corporate trustee who doesn’t manage money, but who instead hires an investment advisor to manage your investments and a CPA to file the tax return. That way, you can rest assured that party is focused on being the trustee, rather than keeping control of your assets — which a bank does.
4. Consider Your Plan for Making Charitable Donations
Donating money to worthy causes is always a good idea. Supporting organizations and movements we believe in is one of the best ways we can put our wealth to work.
And the icing on the cake? Charitable donations can be a great way to minimize your total tax burden while putting that money into the hands of people who really need it and who will use it well. Talk about a win-win situation!
5. Get Ready for RMDs and Medicare
If retirement time is already upon you, you’ll need to prepare to start taking required minimum distributions, or RMDs, out of any applicable retirement accounts you may hold. In the majority of cases, distributions must begin to be made when you reach age 70.5, and will be factored into your total taxable income (except in the case of a Roth account).
If you’re planning to celebrate your 65th birthday in 2019, it’s time to decide what to do about Medicare. The time limits for enrolling are quite stringent — you can only sign up in the three months leading up to your birthday and the three months thereafter. If you still have health insurance through your employer and aren’t planning on retiring soon, you may not need to enroll yet. But you don’t want to get hit with late-enrollment penalties or going without coverage, so make sure you have your plan in place now.
We get it: the first quarter can be stressful, especially with the busy and expensive holidays just behind us. Plus, we’re all getting geared up for the big day coming in April. But by taking these extra steps, you can rest assured that your financial year will progress smoothly, steadily, and with relatively few surprises. (After all, unlike the stuff under the Christmas tree, “unexpected” rarely means “good” when it comes to money!)
For more information on how to make your new year a financial success, and help managing the wealth you’ve worked so hard to earn, don’t hesitate to reach out to us and schedule an appointment or free introductory consultation.
May your 2019 be prosperous — and as paperwork-free as possible!