Talking Finances

[espanol]

Spinoff from the great Talking Stocks 2.0 thread, thought it would be interesting to start a financial planning thread. Would enjoy hearing strategies anyone is utilizing in this trying time for the financial markets. Here's a few I've found helpful in the US:

1) Consider Roth conversions of pre-tax funds. Due to lower stock/fund prices, investors are able to capture the same number of units or shares at lower prices now than in 2021. Note, these are taxable, so this strategy is typically best suited for times when the market is down (like now), or when you are in a lower-than-normal tax year. Always consult CPA or planner before doing this.

2) Revisit unrealized gains in non-retirement accounts. Prior gains may be wiped out, which could present a good opportunity for reallocating to a more long-term portfolio

3) Tax-loss harvest. Don't forget the wash-sale rule

4) Don't forget bank yield for excess cash. Yields have been ~0 for years, but we're finally starting to see high-yield money markets break 3%. Also, consider CDs for funds you wont immediately need. I've found a few 12-month CDs at 4.25%

5) Owners/Sole-proprietors- consider overhauling your 401(k). Few know that you're permitted to put well-beyond the basic 401(k) quoted amounts of $20.5 or $27k (50+ y/o). There is a strategy where owners can put up to $61,000 into a Roth IRA each year using their 401(k), regardless of income limits. It's called a Mega Backdoor Roth Conversion. It's really simple. One needs to have a plan that allows after-tax contributions, and in-service rollovers. Simple to set-up, and the ability to sock away $61k into a Roth each year is a game changer for most

Employees- check to see if your 401(k) has any unique benefits like after-tax contributions or in-service rollovers

6) Don't forget to rebalance your portfolio in accordance to your long-term goals

7) Controversial, but consider holding that low fixed-rate mortgage you have, and not making accelerated payments. Why pay down sub-3% debt when you could get more in a high-yield money market (at a minimum)?