Quarter Four 2017 Commentary & Year-end Investment Tips

November saw record highs in the three major indices: the DOW Jones Industrial Average, the Standard & Poor’s 500 and the NASDAQ.

Outgoing Federal Reserve Chair Janet Yellen told Congress earlier in the week that the central bank is concerned with letting growth get out of hand and is committed to continuing to raise rates in a gradual manner. The consensus, even with Yellen’s departure, is that we may see two to four gradual rate hikes by the end of next year –good news for well-diversified fixed income investors.

Year-end Investment Tips

Fully fund retirement accounts. Most IRA plans have an April 15th (April 17th in 2018) contribution deadline but most qualified plans, such as 401(k)s and 403(b)s must be funded via payroll deductions by December 31st.

Donate appreciated assets to a qualified charity and avoid tax on any gain while at the same time getting a tax deduction for the donation.

Sell non-appreciated assets now for current income needs while leaving highly appreciated assets to heirs who can benefit from a step-up in cost basis. (We do this for you automatically when appropriate.)

Take advantage of the annual gift tax exclusion. Anyone can give anyone else up to $14,000 per year without any tax consequence (a couple can gift up to $28,000) but the gift(s) must be made by December 31st. The annual gift tax exclusion will be increasing to $15,000 starting in 2018.

Give appreciated securities to low tax rate family and they could potentially avoid capital gains taxes. But be sure to coordinate the gift with a tax advisor so as not to accidentally push the recipient into a higher tax bracket.

Harvest losses – sell depreciated holdings to offset gains. (We do this for you automatically when appropriate.)

Watch out for the Alternative Minimum Tax (AMT) and coordinate itemized deductions. Defer income and realize deductible expenses.

Delay taxable discretionary retirement account withdrawals until next year, if tax appropriate.

Convert Traditional retirement accounts to Roth, if doing so makes sense.

Consult with your tax professional before the end of the year.

                                                                                                                                                                                             And Have a Happy New Year!