3 Tips to Plan Your Investments for Year-End

I hope you enjoyed the Thanksgiving holiday!  

We have just over a month remaining in 2016, and it’s going to go by super quickly. To be honest, I was both annoyed and excited by the Christmas music I heard before Thanksgiving. I wanted to just enjoy Thanksgiving. Since Christmas is my favorite holiday, however, you’ll have to bear with my side-eye excitement.


Are you ready to close the year?


I saw Arrival this past weekend, and it reminded me that we have little control over the future. If you’ve seen it, you know what I mean.


If you haven’t yet, I encourage you to see the movie because it provides an interesting twist on our ability to control (or change) the future. I will whet your appetite with this question – If you could change the trajectory of your life’s journey thus far, would you?


Well, I asked this loaded question to several people over the weekend. Many responded that they would make different financial and investment decisions to put them in a different position today. If you can relate to this feeling, leave a comment below and let’s chat it up. If not, I want you to leave a comment about one financial action you made that changed your life’s trajectory for the positive.


Either way, I want you to read these 3 tips that you can use over the next 30 days to help set you up for a 2017so that you can (or continue to) feel ahead of the game:


3 Tips Before 2016 Ends:

  1. Make changes to your 401k contributions as needed. If you want to stash some extra cash away for retirement and get a tax deduction, it’s not too late. Check your 401k statement, where you will find out how much you’ve contributed thus far.


If you got an increase in salary, or stopped paying social security tax already this year, then you probably have the capacity to put a little more money away if you haven’t maxed out at the $18,000 cap already. Or, if you just want to be a badass investor and get ahead of the game, go for it. If you missed last week’s post on how to do a full 401k check-up, check it out.


  1. Plan your tax deductions now. Most people think about taxes after the calendar year ends, when they are about to file their tax return. But, now is really the time to start planning what and how much you will deduct. Drop your tax advisor a note now to ask how you might strategize for the end of the year today. I’ve previously talked about how a Trump Presidency could affect your money, and here’s another insight – favorable tax deduction policies could change, as denoted in this Wall Street Journal article “Maximize Your Deductions Now. A Trump Presidency Means You Could Lose Them.”


  1. 2017 planning starts now. Whether you are single or married, now is the time to start thinking about your financial situation for next year. Make a date with yourself and/or your partner, and start the money conversation. You’re already doing this indirectly by planning those trips, weddings, baby celebrations, or investments you want to make. But, now is the time to do this holistically with some concrete goals in mind. Want to know how? Leave a comment below.


As 2016 winds down, my wish for you is joy and peace. And, let’s get that money right!

What Mrs. Janet Has to Say About the Market

In case you think I’m talking about Mrs. Janet Jackson, I’m not![Side note: The market hit a trifecta today – all 3 indices (S&P, Dow Jones, and Nasdaq) hit ALL-TIME highs. Read my commentary below for more details.]

Before you get there, I’m talking about Mrs. Janet Yellen, the Fed chairwoman. [Woot woot for this woman doing her thing in the market]. She spoke on Capital Hill last Thursday about the state of the economy, saying:


“At this stage, I do think that the economy is making very good progress toward our goals, and that the judgment the [Fed Policy] committee reached in November still pertains.”


In short, she thinks that the economy is strong enough to withstand an interest rate hike, and signaled that the Fed may raise rates at its meeting in mid-December. Mrs. Janet’s conclusion is based on several recent data points:

  • Housing starts were the strongest since 2013. Strong home starts means that residential housing projects are on the move, and this is good for the overall economy.


  • U.S. consumer prices rose at its fastest rate in two years. Remember, rising consumer prices signal inflation, or the tendency of prices to rise over time. When the Fed sees signs of inflation, which it wants to keep in check, it will evaluate whether or not to raise rates to prevent inflation.


  • The number of people filing for unemployment insurance (or as you might know it - “unemployment checks”) dropped to the lowest level since 1973.The less people getting unemployment checks, supposedly the more people going back to work.


She, and the committee, will be keeping her eyes on what President-elect Trump does too because it will affect the economy in the long-run.

How will Mrs. Janet’s comments affect your investments?

First, take it all in. If you've never cared about this before, now's your chance because it affects you. Remember, this is economic data, and investors are all over it because economic data helps investors make bets on where to put their money.


You may have noticed a surge in financial stocks over the last few days. Well, this is because with the potential rise in interest rates, banks can charge consumers (that’s us) more for borrowing money. Therefore, banks will be poised to make more money, increasing their future cash flow, and thus driving up their stock prices today. We saw this first-hand with the stock market reaching all-time highs across all three indices, which all moved higher largely because investors are piling into financial stocks.


But, also keep in mind that higher interest rates over the long-term are bad for stocks. Why you might ask? Well, stock prices are driven by the market’s perceived value of what the underlying companies are worth. This “value” is derived by determining how much cash flow these companies will generate in the future, and then that amount is discounted (or lowered) to how much that value is worth today. The discount back to today’s dollars is directly linked to interest rates. The higher interest rates are, the lower overall stock prices will be in the long-term.

So, here are some things you can do:

  1. Go back to your investment philosophy and examine what you hold. Ask yourself whether you need to make any adjustments to your holdings – do you want to take some profits given the strong rise in the markets recently? Do you want to re-allocate anything?
  2. Ask your advisor how they are thinking about your asset allocation, or how much of your money is sitting in bonds vs. stocks vs. something else (e.g. real estate, cash).
  3. Do a 401k check-up. Read how HERE!
  4. Continue to pay attention to the market.

And, as Mrs. Jackson (now Janet that is), would say----- CONTROL! You have control over your situation and I want you to feel empowered to digest what’s happening around you and make moves accordingly or at least be comfortable with not taking action.

I hope you have a WONDERFUL Thanksgiving! I remain grateful to you for being part of the Charisse Says community. Enjoy time with your family and friends this week! I sure will!