Charles Schwab: 4 Money Management Moves Before Year End
The New Year is just around the corner, but that doesn't mean there aren't some money management moves you can make now. From reallocating your portfolio to using what's left in a flexible spending account, Charles Schwab listed four moves to make before we ring in the New Year.
Take remixing the portfolio for starters. According to the San Francisco-based discount brokerage, before the year is complete, investors need to take a look at their investment portfolio and make sure their asset allocation isn't out of whack. With the stock market flying high all year, investors could be overexposed in one area and underrepresented in another. That could leave their investment plans more risky or more conservative than their ideal allocations. As a result, making sure the stocks and bonds in an investment portfolio are in line with the risk tolerance and time horizon of the investor is an important end-of-year money management move.
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For self-employed workers, the end of the year means they have to pay their final quarterly tax bill for the year by Jan. 16. Miss the payment, and they could be on the hook for penalties and fines that can make the tax bill even greater. The Charles Schwab Corporation (SCHW) says it's a good idea to jot down the deadlines for the quarterly tax bills for next year as well and to set reminders. The more you plan for next year's taxes ahead of time, the less caught off guard you will be when the tax bill comes due.
Furthermore, people who turned 70-and-a-half years of age at any time during 2017 and have yet to take their first required minimum distribution, or RMD, need to do so before April 1 to avoid getting hit with a 50% penalty, advised Schwab. With only a few days left in trading for 2017, investors will have to make a move now. Keep in mind that you'll have to take another RMD by Dec. 31, 2018, as well. The same rule applies to retirees who have a 401(k) and are no longer working, noted Schwab.
On the health insurance front, the discount brokerage said that, for consumers who have money left in their healthcare flexible spending account for 2017, they have to use it before March 15 or give it up. And since no one wants to leave money on the table, using some of it now for qualified medical expenses can put you in a better situation come March, when you'll have to make sure the account is depleted. However, people with health savings accounts, or HSAs, don't have to worry about spending all the money in the account, as HSA balances can carry over from one year to the next.