Essential year-end investment checklist: Optimize your financial strategy before the year ends

People often wait until the new year to get their finances in order. Once the new year hits, they create resolutions in hopes of changing behaviors to finally achieve their goals. However, if you wait until Jan. 1 to focus on your investments, you’ll miss out on valuable opportunities to boost your returns, reduce taxes, and optimize your portfolio. A structured and disciplined investment approach, supported by a comprehensive investment checklist, helps avoid costly mistakes in investing.

Use this investment checklist to implement an annual financial review to get a head start on your finances and take advantage of time-sensitive tasks that can yield massive results.

Year-end tax planning strategies

Estimate your tax situation

As the year comes to a close, the tax season is just around the corner. In January, you’ll start to receive W-2s, 1099s, K-1s and other important tax documents. If you wait until then to start your tax planning, it’s too late because some tasks need to happen during the tax year.

One of the first steps on your investing checklist is to estimate your tax bill. While it may not be accurate, having a rough estimate of your taxes due lets you make important decisions. You’ll know when to time investment decisions, how much to contribute to tax-deferred accounts and whether you qualify for certain tax programs that can lower your tax bill. If you have flexibility on when you’ll receive income, knowing which tax bracket you’re in, and where you fall within it, allows you to time those payments to avoid bumping into a higher bracket. This can also prevent losing out on valuable tax credits or deductions that phase out for higher-income taxpayers.

The IRS offers a free tax withholding estimator, but it may be overly simplistic for some investors and has some glaring exceptions. For example, you shouldn’t use it if you are 65 or older, earned income from tips or overtime, or if you paid more than $10,000 in state and local taxes. While you can estimate your tax burden on your own, it is often much quicker and more reliable to work with a tax professional. Tax preparation tools like H&R Block and TaxAct also offer free tax calculators.

Tax-loss harvesting opportunities

Investors hope that all their choices increase in value. However, that is rarely the case. Whether it’s a short-term loss or an investment that didn’t work out, you have the opportunity to reduce your tax burden. Tax-loss harvesting is the strategy of selling stocks, bonds, mutual funds, ETFs and other investments that have lost value to “harvest” the losses.

Capital losses are used to offset capital gains dollar-for-dollar. If you have more losses than gains, you can offset up to $3,000 per year in ordinary income (like a W-2 salary). In years that you have even more losses, you can carry them forward to offset future capital gains and ordinary income.

In order to take advantage of tax-loss harvesting, you must sell the shares during the calendar year in which you’ll claim the losses. Tracking the cost basis of your investments is an essential task on your investor checklist. You can identify which investments to sell to claim losses that can reduce your tax bill.

Brokerage or investment firms typically track gains and losses on a first-in, first-out (FIFO) or last-in, first-out (LIFO) basis. They report your gains and losses at the end of each year.

Be aware of the wash rule, which prohibits you from claiming losses on an investment if you repurchase the same asset (or something “substantially identical”) within 30 days of selling it.

Tax-gain harvesting considerations

Harvesting isn’t just about selling losing positions. In some years, it makes sense to add harvesting your gains to your investment checklist as well. Tax-gain harvesting is the strategic selling of shares that have grown in value.

Harvesting gains allows you to take advantage of fluctuations in your tax situation each year. Situations where you’d harvest your gains include:

• Matching tax-losses. Instead of carrying forward your losses, sell profitable investments to use up all of your tax losses.
• Rebalancing your portfolio. When investments gain too much in value, many investors choose to rebalance their portfolio to reduce risk.
• Years when you’re in a lower tax bracket. In low tax bracket years, you can harvest gains to maximize each tax bracket to eliminate capital gains tax or pay lower rates.
• Before changes in tax laws. Tax laws change regularly. If upcoming tax laws are expected to be less favorable, harvesting gains now can help you avoid higher tax bills in the future.
• When you qualify for long-term capital gains. Holding investments for more than a year before selling switches their tax treatment from short-term to long-term capital gains rates, which lowers the tax bill on your gains.

Investment checklist: Retirement account optimization

Maximize Retirement Contributions

Retirement accounts offer substantial benefits to those who make regular contributions. In traditional retirement accounts, contributions reduce your taxable income, and the money grows tax-deferred until you make withdrawals. You only pay taxes on the money you withdraw each year. Roth retirement accounts don’t qualify for tax deductions today, but the investments grow tax-deferred, and you don’t pay taxes on the money withdrawn in retirement.

You can open and contribute to your IRA until the filing deadline. For example, you have until April 15, 2026, to open and fund your IRA for tax year 2025. SEP-IRAs for self-employed people can be opened and funded as late as your tax-filing deadline, including any extensions that you qualify for. Contributions to employer-sponsored plans, like a 401(k) or 403(b), must be made by Dec. 31st of the tax year.

Contribution limits vary by plan and can change from year to year. For 2025, retirement plan contribution limits are:

• Traditional or Roth IRA: $7,000
• 403(b): $23,500
• 401(k): $23,500
• SEP-IRA: 25% of compensation or $70,000, whichever is less

If you aren’t contributing the maximum to your retirement accounts, set up automatic contribution increases to get closer to your goal. Many companies allow you to change your contribution amounts each pay period. Consider making extra contributions toward the year-end to maximize your annual contributions.

Contribution limits may increase from year to year, so add this to your annual investment checklist to ensure you’re keeping up with those changes.

Employer matching contributions

In addition to providing tax benefits, contributing to your employer-sponsored retirement account can provide an immediate return through employer contributions. These contributions add extra money to your account and are an important piece of your compensation package.

Typically, employers contribute a percentage of your salary based on how much you contribute. A typical employer-matching scenario is 50% of your contributions, up to a maximum of 6%. If you contribute 6% or more, your employer contributes 3%. Someone who contributes 4% to their retirement plan would receive only 2% from their employer.

Employer contributions often have a vesting period of a few years to ensure they’re rewarding employees who stay for the long term. However, many companies now offer 100% vesting from day one.

Retirement account catch-up provisions

Investors who are 50 and older can also make catch-up contributions to their retirement accounts. The catch-up amount also varies by type of retirement account:

• Traditional or Roth IRA: $1,000
• 403(b): $7,500 (ages 50 to 59 and 64 and older; ages 60 to 63 can contribute $11,250, if your plan allows)
• 401(k): $7,500 (ages 50 to 59 and 64 and older; ages 60 to 63 can contribute $11,250, if your plan allows)
• SEP-IRA: None

IRA catch-up contributions can be made up to the original due date of your tax return. Getting an extension does not provide extra time to file does not provide additional time to make IRA catch-up contributions.

Required minimum distributions (RMDs)

For senior investors, the investment checklist focus should be on how much to take out of their retirement plans rather than how much to contribute. The IRS requires seniors to take a minimum amount of money out of their traditional IRAs, 401(k)s, and similar tax-deferred retirement plans each year. If they don’t, there’s a penalty for not withdrawing the money and paying taxes on it. This is known as a “required minimum distribution” (RMD).

The current RMD rules require seniors who turn 73 and above during the tax year to withdraw a percentage of their retirement accounts. The required minimum withdrawal based on your age can be found in IRS Publication 590-B. Most investment firms will calculate your RMD for you as well, but their calculations may not include investments held at other firms. You can delay your first RMD until April 1 of the following year. All subsequent RMDs must be taken by Dec. 31st of the tax year to avoid penalties.

If you have multiple IRAs, your RMD amount can be taken from any single account or from multiple accounts of the same type, as long as the total meets or exceeds the RMD for the current year. However, RMDs from different types of accounts, like an IRA, 401(k), or 403(b), must be taken from each type of account.

RMD rules do not apply to owners of Roth retirement accounts. However, they do apply to their beneficiaries.

If you do not take your RMD each year, the penalty is an excise tax of 25% of the amount that was not withdrawn. The penalty can be reduced to 10% if you correct it within two years.

Even if you don’t need the money, you must still take the RMD each year. Instead of spending the money, you can invest it into a brokerage account, pay off debt, invest in your child’s or grandchild’s 529 Plan, or make charitable contributions.

Roth conversion opportunities

Converting money from traditional to Roth IRAs can eliminate future tax burdens on retirement withdrawals. If you have lower income tax obligations this year or fear higher tax brackets in retirement, a Roth conversion can make sense.

Roth conversions take money from traditional retirement accounts and move them into Roth accounts. This strategy requires paying taxes on the converted amount this year, in exchange for the promise of no income taxes on withdrawals in retirement.

Before pursuing this strategy, consider the following questions:

• Can you pay the taxes on the converted amount without dipping into your retirement accounts?
• Will the conversion push you into a higher tax bracket?
• How much room do you have in the current tax bracket?
• Will you have enough time for the growth to offset the current tax obligations?
• How likely is it that your tax bracket will be higher in retirement?
• Can you spread the conversion over multiple years to reduce the tax burden?

Roth conversions are also used by people who make too much money to qualify for Roth IRA contributions. Through a process known as a “backdoor Roth IRA,” investors contribute to a non-deductible IRA account and then convert it to a Roth IRA at a later date.

Investment checklist: HSA and FSA year-end strategies

Health savings account (HSA) contributions

Health savings accounts (HSAs) allow investors to set aside pre-tax money for future healthcare expenses. To be eligible for an HSA, you must have a high-deductible medical insurance plan with a deductible of at least $1,650 for self-only coverage or $3,300 or higher for a family plan.

Investors contribute to HSAs to take advantage of the triple-tax benefits. HSA contributions are made on a pre-tax basis, and the money grows tax-deferred. When used for eligible medical expenses, your withdrawals are tax-free. If you don’t spend money in your HSA each year, the money rolls over to the next year in perpetuity until it is withdrawn. Many HSA plans allow people to invest their money to receive potentially higher returns than the interest on a savings account.

The current HSA contribution limits for 2025 are $4,300 for individuals and $8,550 for families. Additionally, you can make a $1,000 catch-up contribution if you are age 55 or older. If you’re married, your spouse can also make a $1,000 catch-up contribution to a separate HSA account if they are 55 years or older.

HSA users typically contribute through payroll deductions, but you can also contribute directly to your health savings account. You must make your contributions by the tax-filing deadline each year.

Flexible spending account (FSA) considerations

Another option for paying medical expenses on a pre-tax basis is a flexible spending account (FSA). Unlike an HSA, you don’t need to enroll in a special medical insurance plan to be eligible for an FSA. But you cannot enroll in an FSA on your own. It must be offered by your employer.

FSA contribution limits are $3,300 in 2025. This money helps to cover out-of-pocket medical expenses beyond your insurance premiums. Examples of eligible medical expenses include doctor or dental co-pays, chiropractic care, birth control, prescriptions, athletic treatments and contact lenses.

However, you must spend all of your FSA contributions each year on eligible medical expenses to avoid losing any unused balance. For this reason, it is important to forecast how much you’ll spend each year to avoid contributing too much and losing that money. If you’ve contributed more than you’ve spent, you can roll up to $660 into the following year if your employer’s plan allows it.

Education planning year-end review

529 Plan contributions

Saving for college is a high priority for many parents. With 529 Plans, you can invest in tax-deferred accounts that offer tax-free money toward eligible school expenses. Recent changes in 529 Plan rules allow the money to be spent not only on college tuition, books and eligible expenses, but on elementary and secondary expenses as well.

529 Plans technically don’t have contribution limits. However, money gifted through these programs are subject to annual gift tax limits. In 2025, you can gift up to $19,000 per person (up to $38,000 for joint filers) without the amounts counting toward your lifetime gift tax exemption.

Each person you gift this amount to can receive the maximum, and your spouse can also gift up to the gift tax limit. This means that a parent with two children can gift each child $19,000 in their own separate accounts. The second parent can also contribute the same amount to each child.

Grandparents, aunts and uncles and other relatives can also contribute up to $19,000 each to your children. The contribution limit is based on their gift tax exemption, not on the child’s 529 Plan account balance. This is a smart strategy for estate planning purposes because the money reduces your taxable estate.

For investors looking to make a larger contribution, it is possible to “superfund” your child’s 529 Plan. Rather than making five annual contributions, you can contribute five years’ worth of contributions in a single year. In 2025, you can contribute up to $95,000 per child so long as you don’t make additional contributions for the next five years.

Some states offer tax incentives when making 529 Plan contributions. These incentives include tax deductions or tax credits, but they may have eligibility limits based on how much you contribute or your annual income.

Investment checklist: Portfolio review and rebalancing

Portfolio balance and diversification

Avoiding concentration in any one investment or asset class is key to weathering market fluctuations. Understanding your risk tolerance is essential when building a diversified portfolio, as it helps you align your investment choices with your comfort level and financial goals. Studies have shown that a properly diversified portfolio reduces risk without sacrificing returns. In some cases, your long-term returns can be even greater with a diversified portfolio. Diversifying a portfolio across different investments, sectors, and regions can help manage risk.

Even when you set up your diversified portfolio, it won’t necessarily stay that way. Over time, investment returns shift the makeup of your portfolio and overweight it into higher-performing sectors. Your investment checklist should include rebalancing your portfolio every six to 12 months. This allows you to take some profits off the table and buy underperforming investments at a discount. This is commonly known as “buying low and selling high.”

Some accounts, like 401(k) plans, offer automatic rebalancing, while others, like an IRA, require you to do it manually. Consider setting a calendar reminder every six months to handle this task on your investment checklist.

The selling of profitable investments doesn’t have a tax impact within tax-deferred accounts, like an IRA, annuity, or 529 Plan. However, you incur a taxable gain when selling inside your brokerage account. To minimize the tax consequences, use tax-gain/loss harvesting strategies or simply shift all new contributions to underperforming assets until your portfolio is back in balance.

Investment performance evaluation

As the year-end approaches, your investment checklist should evaluate your portfolio’s performance. Each sector performs differently, and you shouldn’t sell an investment just because it is down. However, you should evaluate each investment’s performance against its peers and determine whether it still fits into your long-term strategy.

Warren Buffett’s investment success at Berkshire Hathaway is based on a carefully crafted checklist that includes evaluating management integrity, understanding the business (circle of competence), and ensuring the stock is trading below its intrinsic value. Buffett only invests in businesses with strong and sustainable competitive advantages, known as economic moats, and Coca-Cola is a classic example due to its brand power and customer loyalty. He emphasizes that investors should only buy businesses they fully understand, and that evaluating management for integrity, competence, and alignment with shareholder interests is essential. Buffett ensures he only buys stocks trading below their intrinsic value, providing a margin of safety, and prioritizes companies with strong and predictable cash flow.

When evaluating potential investments, review historical financial statements and analyze key ratios like the price-to-earnings (P/E) ratio alongside earnings growth to assess valuation and growth potential. Discounted cash flow analysis is a key method to determine if a company is undervalued or fairly priced. No single valuation method fits all; choose based on your goals and market conditions, considering approaches like discounted cash flow, P/E, and PEG ratios. Strong cash flow, consistent earnings growth, and dividend payments indicate financial health. Equally important is assessing management quality and competitive advantages, including their integrity, competence, and shareholder alignment. A disciplined investment methodology reduces emotional bias and enhances success. Identify investment-specific risks and ensure potential returns justify them. Conduct thorough research to avoid scams and make informed decisions. Monitor stock price relative to intrinsic value and market trends, and evaluate strategies over long periods to account for market cycles. Due diligence should cover competitive landscape, management experience, and regulatory compliance. Focus on industries within your expertise (circle of competence), as Buffett did before investing in technology stocks like Apple. Use financial planning tools like Investor.gov and FINRA BrokerCheck to verify financial professionals.

Part of this analysis should include a comparison of fees for each investment. Mutual funds and ETFs have ongoing fees that may be higher than peers or industry averages. Your brokerage accounts and retirement plans may also charge fees that can eat into your portfolio returns. Seek out low-cost index funds over managed portfolios to keep more of what you make. Compare trading platforms to find one that offers low-cost or no-fee transactions if you trade regularly.

Year-end charitable giving strategies

Maximizing charitable deductions

Charitable giving allows investors to fund causes that they care about. As an added benefit, you may be eligible for tax deductions for that giving. Contributions to charity may be up to 50% of your adjusted gross income and must be made within the calendar tax year. However, you may be required to itemize deductions in order to deduct your charitable donations.

Investors who are required to take RMDs may use up to $108,000 of that money each year to make charitable donations and avoid having it count toward their taxable income. By using the Qualified Charitable Distributions (QCDs) rule, you can meet your RMD obligations while also supporting your favorite charities.

For money in your brokerage account, donating an appreciated asset allows you to deduct the investment’s current value without having to pay taxes on its gains.

If you’re unsure who to donate the money to, consider setting up a donor-advised fund (DAF). A DAF allows you to take the tax deduction today while remaining in control of the money until you find a charity (or multiple charities) you want to support. Your DAF can span multiple years and allow you to donate money over time to your favorite causes.

Emergency fund and insurance review

Expecting the unexpected

Having an emergency fund is key to avoiding debt when unexpected expenses occur. Having three to six months of expenses set aside in a liquid account is ideal for most households. If you’re self-employed or your income fluctuates, consider setting aside six to 12 months of expenses.

Ideally, you never have to tap these funds. But if you do, having them in a liquid account, like a high-yield savings account, money market account or short-term CD, can provide quick access to the money you need.

If you don’t have an emergency fund already or don’t have enough set aside, start by opening your account with a small deposit. Add to it on a regular basis until you reach your goal. As your balance grows, consider putting some of it into a higher-yielding short-term CD to lock in higher interest rates. Avoid putting your emergency fund into the stock market or other volatile investments. You don’t want to be in a situation where you need the money and are forced to sell at a loss because your investments have dropped in value.

Insurance coverage evaluation

Reviewing your insurance policies should be on your investment checklist as well. Insurance is a way to pay a small premium today to protect against a large expense in the future. Policies can provide financial assistance for a variety of situations, including death, disability, long-term care and lawsuits against your business.

• Life insurance. Experts often recommend having life insurance equal to at least 10 times your annual salary. However, you should adjust this guidance based on your debt, child education costs and other factors.
• Disability insurance. This policy provides income in case you cannot work due to illness or injury. According to the American Bar Association, over 25% of 20-year-olds will become disabled before they retire.
• Long-term care. Having LTC insurance ensures you’re taken care of as you age. Its funds can provide extra help at home or pay for a room in an assisted living facility.
• Property and casualty insurance. Review your policies each year to ensure your homeowners insurance, auto insurance and other coverages protect the value of your assets and protect you from lawsuits.
• Umbrella policy. An umbrella policy can provide additional higher limits of coverage beyond your policies and avoid gaps in your protection.

Estate planning year-end updates

Review your beneficiaries and asset titling

Although your beneficiaries and account titles shouldn’t change, clerical errors do happen. Review your accounts to ensure they match how you want them to be titled. This is especially important for people who have had a new child, gotten married or divorced, had a death in the family, or created new estate planning documents. Stories abound of people who got remarried and died, then their ex-spouse received their 401(k) balance instead of their new spouse. Similarly, children may get left out of the estate when documents aren’t updated to include them.

It is also essential to review asset titling after establishing a living trust. If your accounts aren’t properly titled, they may be subject to probate laws and costs instead of being directed by the living trust documents.

Incapacity planning review

Beyond a living trust and will, it is wise to have other legal documents to protect your finances. These documents are often forgotten during the estate planning process:

• Power of attorney documents. These documents allow others to make decisions on your behalf. For example, if you’re in a coma.
• Healthcare directives. A healthcare directive enables you to make medical decisions ahead of time in the event you aren’t capable of making them at the time. Common healthcare directives include “do not resuscitate” or Physician Orders for Life-Sustaining Treatment (POLST).
• Trust documentation. A living trust provides instructions for how your estate is to be distributed from beyond the grave. You can set distinct guidelines or milestones that heirs must meet before receiving their share.
• Guardian designations for minor children. Choosing who will raise your kids if you’re unable to may be one of the most important decisions a parent can make. Review your choices regularly since relationships can change over time.
• Legacy letter or ethical will considerations. Part of your estate plan can include a legacy letter to loved ones, sharing a final goodbye and the important lessons you want to leave your family.

Investment checklist: Setting financial goals for next year

Self-assessment of the current year

Throughout the year, it is important to track your progress and assess how you’re doing against your goals. These self-assessments will help you identify your strengths and areas where you may need outside help to accomplish your goals.

Life changes can impact your planning and shift your goals. Getting married, having a baby, buying a house, being laid off or getting sick can impact your goals and finances. When life happens, it’s important to know that it’s ok to change goals to match your new circumstances.

It is also important to celebrate your wins and milestones. These celebrations reinforce the positive behaviors that carry you through to achieving your next goal. For example, saving your first $1,000, reaching $1 million in net worth, or paying off your home are all worthy of a celebration. Celebrating doesn’t require lavish spending. It can be as simple as buying a sweet treat, opening a bottle of wine or having a dance party with your significant other.

Establishing SMART financial goals

When setting your financial goals, make them SMART: specific, measurable, achievable, relevant and time-bound. This approach helps you set goals for short, medium and long-term success that align with your values and priorities.

Meeting your financial goals is easier with accountability. Add quarterly check-ins to your investment checklist by scheduling meetings with financial advisors, tax professionals, your spouse, or even a trusted friend. During these check-ins, you can discuss your progress, measure performance and identify areas of concern.

Conclusion: Implementing your year-end investment checklist

Your investment checklist includes several key steps to take before year-end. If you miss the Dec. 31st deadline, you could miss out on the ability to contribute to accounts, lose out on important tax breaks or be subject to penalties. Additionally, the end of the year is a good time to review financial accounts, rebalance investments and update beneficiaries. The time you spend can also provide a head start for the new year and create an action plan toward meeting your goals. If you’re having a difficult time implementing these strategies, consider hiring a financial advisor, working with a tax professional or talking with an estate planning attorney.