Fete Lifestyle Magazine December 2025 - Holiday Issue | Page 31

1. Maximize Your Tax-Advantaged Contributions

This is often the lowest-hanging fruit for increasing your net worth. Every dollar you contribute to a tax-advantaged account is a dollar that works harder for you.

●401(k) / 403(b): Review your payroll deductions to ensure you are on track to meet the IRS limit, if possible. If you are behind, contact your payroll administrator to front-load contributions for the final paychecks of the year.

●IRA (Traditional or Roth): You have until the tax deadline next April to make contributions for the current year, but finishing this task before December 31st clears your plate and ensures the money is invested sooner. A helpful strategy is to project your maximum annual contribution early in the year and automate consistent, smaller contributions monthly or bi-weekly to leverage dollar-cost averaging.

●HSA (Health Savings Account): If you have a high-deductible health plan, maxing out your HSA is a triple-tax advantage: contributions are deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are tax-free.

2. Rebalance Your Portfolio to Your Target Risk

Markets are dynamic, but your risk tolerance shouldn't be. Over the last year, your original target allocation (the split between stocks and bonds, like 70/30) has likely drifted. For example, if stocks had a great year, they might now make up 80% of your portfolio, making you riskier than you intend to be.

Use the end of the year to bring your portfolio back into alignment.

●If your stocks (like VTI and VXUS) have outperformed, sell a portion and move the proceeds into your bonds (like BND and BNDX).

●If your bonds have outperformed, do the opposite.

Rebalancing ensures your portfolio's risk level matches your long-term plan, safeguarding you from unnecessary volatility.

To maintain discipline, set a calendar reminder—annually or even quarterly—to check your portfolio and initiate the rebalance. This review helps you make sure your money is working for you and not just sitting there. Some portfolios do not automatically reinvest earnings and we want our money to work as hard as we do!