To support year-end planning success, Fifth Third Private Bank (FITB) recently released digital guides with strategies for individuals and families to consider in preparation for tax season. Among the strategies, Fifth Third experts recommend reducing taxable income, maximizing investment opportunities and strategically planning for charitable giving.
1. Reduce taxable income
In order to offset taxable income, the most important strategy for investors to consider is tax-loss selling and taking advantage of underwater securities.
In order to offset taxable income, the most important strategy for investors to consider is tax-loss selling and taking advantage of underwater securities.
"Selling stocks, bonds or mutual funds that have lost value should be a priority this time of year," said Jeff Korzenik, chief investment strategist for Fifth Third. "When done in conjunction with rebalancing a portfolio, investors can minimize the tax consequences and impact."
Additionally, Korzenik suggests taking interest rates into account throughout the planning process. Gradual interest rate increases are being monitored for next year, which are typically associated with the latter half of an economic expansion. With this in mind, investors should expect lower returns from the bonds portion of a portfolio and be more selective in their equity investments as they plan for next year.
2. Maximize investment opportunities
To wrap up 2016, Melissa Register, senior wealth planner for Fifth Third Private Bank, recommends being selective in investment decisions. By working with a wealth management advisor, you can ensure that your allocation aligns with your goals and time horizon for both your taxable and tax-deferred accounts. From this checkpoint, you can identify necessary adjustments.
To wrap up 2016, Melissa Register, senior wealth planner for Fifth Third Private Bank, recommends being selective in investment decisions. By working with a wealth management advisor, you can ensure that your allocation aligns with your goals and time horizon for both your taxable and tax-deferred accounts. From this checkpoint, you can identify necessary adjustments.
"Investors can plan ahead by rebalancing portfolios and diversifying their investments before the close of the year," said Register. "There are significant growth opportunities for 2017 in alternative investments and selective international exposure."
3. Plan for charitable giving during the holidays
When it comes to charitable giving, Glen Johnson, managing director of Mirador Family Wealth Advisors, suggests engaging family members in the decision-making process.
When it comes to charitable giving, Glen Johnson, managing director of Mirador Family Wealth Advisors, suggests engaging family members in the decision-making process.
"More than half of charitable giving is done in one month of the entire year: December," said Johnson. "Holiday gatherings are an opportune time for families to set joint year-end goals and develop a strategy for allocating philanthropic donations in 2017."
Johnson also suggests using assets that have appreciated in value as gifts for charitable donations to avoid capital gains. "People often don't think about real estate, collectibles or art as potential gifts, which could ultimately fund a new program or service for a charity," said Johnson.
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