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Now Is Good Time to Check Stock Holdings

Look for Tax-Saving Possibilities


Investing in the stock market is like a college class that never ends. Long-term investors need to monitor existing stocks and be on the look out for new opportunities.

Monitoring existing stocks does not mean following every tick of intraday trading or focusing on other short-term indicators. It does mean tracking your investments as operating businesses and watching for changes that may mean your initial evaluation may need updating.

There are also other times when you should re-examine your portfolio.

Now is a good time to consider some adjustments to your stock portfolio in preparation for the coming year and to take advantage of last minute tax savings.

These steps may save you some money and get your portfolio back on track for the new year. Here are five steps to consider before the end of the year:

1. Tax planning - Now is a good time to look over your holdings and add up your winners and losers. The IRS lets you offset capital gains with capital losses. If you have sold stocks during the year and are looking at a tax bite on the transaction, you may be able to offset some or the entire bill if you have sold a stock at a loss.

If you are holding a stock that has been a loser and there is a good reason to dump it, you may want to do so before the end of the year to offset any pending gains. Check with your tax adviser about your personal situation before making any tax decisions.

2. Re-balancing - I'm not talking about your tires, although they may need it also. What I'm thinking of is your portfolio and how it has changed over the year. If you started the year with a 65-35 stocks and bonds split, is this where you are now? If you wanted an even split of stocks between growth and income, is that still the case? Look at how your securities have increased or fallen in value over the year to see if the mix needs to be adjusted.

3. New plan - With a new year on the horizon, it's a good time to look at your investment plan and see what changes you need to make. Have there been significant changes in your personal life? Marriage? Divorce? More kids? Kids in college? New job? Do you need to make adjustments in your mix to a more conservative stance or more income oriented? You get the idea. An annual re-assessment is about right for most folks with quarterly checkups (unless something extraordinary happens in your life or the market).

4. Something new - Make it your goal to learn about a new aspect of investing this year. It doesn't have to be big or sophisticated, but most of us find carving out time to research difficult. Set a simple goal, but make it fundamental to good investing. For example, you could set a goal of learning more about corporate bonds or bonds in general if you feel shaky in this area. Don't plan to become an expert, just focus on raising your general comfort level with the subject so you will get more out of news reports, for example.

5. Up your commitment - I hope your portfolio has done better than the market this year. Everyone is hoping for a better year next year, but there is no way of knowing exactly what the future will bring. If you are careful, you can always find good investments in almost any market - it's just easier in some markets than it is in others. Be smart and look for good investments regardless of what the overall market is doing.


Good investing requires some work, but like all work, it is better to work smarter, not harder. Prepare for next year with these steps and you'll be off to a great start.

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