The S&P 500, considered a proxy for the stock market, was down last week. Corporate earnings remain strong yet concerns around the continued government shutdown and a struggling labor market drove the decline. There are also concerns around the AI boom: whether that will lead to continued productivity gains, driving continued economic growth, or if we are in a bubble that will ultimately crash. I tend to lean towards the former, but a pull back – where the market declines slightly before continuing on its upward trajectory, would not be surprising.
They say the only things certain in life are death and taxes. As we approach year end, you still have time to work on the second one. While you have until April 15th to fund IRAs and Health Savings Accounts, you may want to build those contributions into your budget now, even if that means downsizing holiday spending a bit. Consider it a gift to your future self.
Charitable contributions are also worth more this year for most people, as the new tax law puts floors and deductibility limits on donations starting in 2026. Take this time to declutter and make runs to the thrift store. If you are in a position to do so, consider front-loading several years of donations into a Donor Advised Fund.
If you are old enough to have Required Minimum Distributions, and have not taken them, you may want to consider a Qualified Charitable Distribution, or QCD. A QCD sends money directly from your IRA to a non-profit organization. It counts towards your RMD but is not considered income. As a result, it can’t push you into a higher IRMAA bracket for Medicare.
If you have an UTMA, or Uniform Trust for Minor’s Act account, you may want to harvest gains. The first $1,350 of income is tax free. You may want to sell positions and repurchase them, realizing the gains now. This increases the cost basis and reduces the account’s lifetime taxes.
If you have not been harvesting losses in your investment accounts, it may be worth looking at now. While we generally prefer to look at this on a daily basis rather than just year-end, you may have investments that are at a loss, allowing you to sell those now and report that loss on your 2025 taxes.
Your action item this week is to remove the credit card numbers saved onto your online shopping sites. Having to stop and pull out your card, and enter the number, can provide a moment to think about the purchase, rather than riding the dopamine rush of clicking “Buy Now”.
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CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.