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YOU DID what you were supposed to do financially at the start of the year. You established or reviewed your financial plan to be sure its goals and strategies were still appropriate, rebalanced your investment portfolio, confirmed that your estate plan was in place, checked your insurance coverage and so on. Give yourself a round of applause.
You probably don’t want to think about your financial plan until next January. But you might consider doing a midyear mini-review just to make certain you are still on track. Here are some places to start.
• Taxes: Did you either receive a sizable refund or owe a chunk of money in April? If either one happened, now is a good time to correct that for 2019 by projecting your taxes for the year and changing how much you are having withheld from your paycheck or the amount you are paying in estimated taxes.
• Budget: Review your household budget or spending plan. Compare your actual spending to what you thought you were going to spend.
Are you on track? Do you have a good understanding of where your money goes? Do some expenses need adjustment? If yes, by how much? Are you saving enough?
• Fringe benefits: Many companies hold open enrollment in the fall for fringe benefits, so this summer is a good time to start thinking about them, especially health care.
Your employer might have changed health care plans, for example, or the existing plans might have exclusions, prompting you to switch plans.
Perhaps your family circumstances have changed, such as having a baby, so a new plan is preferable. This might be the case with a new marriage as well. Perhaps one partner’s insurance plan is a better option than the other’s.
• Retirement accounts: Have you received a raise this year that might allow you to save more into your retirement plan at work? Or, if a plan is not available through work, can you contribute more to your individual retirement account?
Make sure you check the contribution limits and determine whether you are receiving the maximum employer match, if available.
• Investments: You should review your portfolio to see if you want to make some tweaks to it or need to rebalance it back to a chosen allocation. Does the allocation still meet your goals?
One tweak to consider is for taxes. The decision to buy or sell an investment should generally be based on your need and the fundamentals of the investments themselves, not taxes. But, if you have sold off some winners this year, consider offsetting some of those taxable gains by selling off some losers.
You might also want to review your portfolio’s total return. This number factors in all the fees you have paid.
The next step is to compare each asset class performance against an appropriate benchmark such as the S&P 500 for certain stocks. If there is an over- or underperformance, now is the time to figure out the reason. Is the performance consistent with the asset class? Is it an outlier that means the investment needs to be monitored closely?
• Charitable donations: Yes, you can wait to the end of the year to make planned donations. But consider avoiding the rush and get started now. Perhaps appreciated securities will make the best donation. Perhaps you are over age 70½ and want to make a qualified charitable distribution from your IRA.
As with most areas of finance, if you need help be sure to speak with a professional familiar with your situation.