It’s been a year like no other. A global pandemic. A sudden shift to a bear market. Unexpected oil price drama. A race for a vaccine. Or better testing. Or a nationwide database to trace outbreaks. It all has an impact on your finances. As we head into the last quarter of the year, let’s take stock of what you may want to consider before year-end.
Do you remember what your short and long-term goals were going into 2020? Remember, we were coming off a spectacular year in the stock market. Sometimes you need to reassess your goals. This might be that year.
Are there new priorities that need addressing?
Are you adequately prepared for another market meltdown? If not, what steps should you be taking now?
Are you spending less this year? Can you re-direct that money toward paying down debt?
Do you have an adequate emergency fund in place?
Should you refinance your mortgage or discuss this with your adult children?
Should you consider setting up a reverse mortgage or line of credit to use in case of more market meltdowns?
Credit Report and Identity Theft
The bad guys aren’t taking a holiday.
Do you have a trusted contact person?
Have you checked your credit report in the last year?
Look into hiring a credit monitoring service?
Lots of people just refused to look at their accounts during the first half of the year. Be brave and ask yourself some questions.
Are you less comfortable taking risk going forward? Or do you want more risk?
What is your current asset allocation? (Your mix of stocks and bonds.)
What is your target asset allocation? Are you within the appropriate ranges for each asset class?
Review the opportunity to do some tax-loss selling before year-end.
Watch out for year-end mutual fund capital gains distributions.
The massive government spending initiatives to mitigate the economic effects of the pandemic will eventually have to be addressed. That could have a big impact on where tax rates go in the future.
Make sure you are up to date with Tax-Free Savings Account (TFSA) contributions. You can check your contributions through the CRA. Consider signing up for a MyCRA account on their website to find out if anything has been missed.
Do you have a capital loss carryforward that you can use to reposition assets?
If you have stock options that will expire in the next few years, should you accelerate the exercise to this calendar year? Are there other tax issues that make this even more compelling?
Are there other “tax bracket planning” opportunities to take before year-end?
We had a rapid drop in the stock market in March followed by a rapid recovery in subsequent months. Where we go from here is anyone’s guess.
Are you still comfortable with your spending plan in retirement? It may be that you’re already spending less because most people are still not travelling or eating out the way they used to.
Do you think your retirement date is still on track? Has anything changed that could affect that?
If you have been affected by layoffs this year, should you adjust what you’re saving in a retirement plan to free up cash flow?
Has your company match on your retirement plan been affected?
This year has been a year of devastating loss. And this pandemic is not over.
Is your estate plan up to date?
Have you shared essential documents with the people you’ve asked to help with your estate?
Are your trusts funded?
Are your beneficiary designations up to date?
Do you want to do any charitable giving before year-end?
I’ll admit, that’s one heck of a checklist. Life has been hard enough this year without adding more pressure now. But if you find one or two things that stand out for you, try to get those done. And don’t forget we are here, ready to help. We’re in this together.
Download the complete Third Quarter 2020 Portfolio Planning:
Anchor Pacific Investment Management Corp. (“Anchor Pacific”) is a Vancouver, BC-based portfolio management firm, which leverages process, technology, and infrastructure to democratize the process of managing endowment and pension style investment portfolios to deliver innovative, high-touch, and transparent investment programs across the full spectrum of asset owners and investment consumers.