It's that time of year.
No, I'm not referring to the post-Thanksgiving-meal turkey-and-football stupor.
I'm referring to all those stories with catchy headlines like, "Top Stocks You Must Buy In 2016" or, more commonly these days, "Cash Out Now Before Every Single World Market Collapses In 2016!"
You know the kind.
Hate to break it to you, but about 99.99% of those stories are completely useless.
Those "top stocks to buy" stories have hit-or-miss results, at best. Often, they're just a mashup of some S&P 500 stocks that have high dividend yields or hail from high-growth industries. They're often written by journalists who run some kind of screen and like what they see. They're not written by people with any kind of fiduciary responsibility to actual investors. If the top stocks flounder -- or worse -- that writer isn't responsible for your portfolio losses.
The second article, which we see absolutely everywhere, ad nauseum, is the "fear sells" headline. It's been around forever, but as a marketing tool, it's absolute gold. People believe they live in an era in which horrible, unprecedented events will occur. I have this argument with online trolls all the time, who constantly predict some kind of planetary Armageddon, usually due to the Federal Reserve. They haven't been right yet. I'm not holding my breath.
So what does constitute good year-end advice?
Turns out, it has nothing to do with picking the right stocks or stashing the money under the mattress at just the right moment.
Here are some year-end tips you won't hear about from the scary-headline crowd:
1. Use tax-loss harvesting. Consider selling some liquid assets that are showing paper losses. This loss is deductible from any capital gains you incurred this year. If you trade stocks and had short-term capital gains, tax-loss harvesting is something worth considering.
2. Make your charitable donations. Dec. 31 is the last day to take advantage of an itemized deduction from charitable giving. Write those checks or clean out the garage. Another way to benefit from charitable contributions is with a donor-advised fund. However, you have to establish the fund prior to Dec. 31 to get a deduction for this year.
3. Check your beneficiaries. All those accounts you have, both for trading and long-term investing? Who gets the money if you are hit by a bus? It's possible things in your life have changed since you filled out those account forms. Maybe you have children or grandchildren you didn't have before, or you got married, divorced or re-married. It's worth reviewing accounts to make sure your beneficiaries are listed correctly. I've seen way too many mistakes in this arena, made by well-intentioned people who passed away suddenly, without making sure their current wishes were reflected in their account paperwork. By the way, you can't skate away from this just because you have a will. I see that a lot, too, where people dismiss the need to update their account forms, because they have a will. That's just lazy and can create problems for your heirs.
4. Take your required minimum distributions. Did you turn 70-and-a-half in 2015? If so, it's time to take the RMDs from your traditional individual retirement accounts. The amount is based on the account value at the end of the previous year, as well as your life expectancy. There are RMD calculators on the IRS Web site and your financial advisor can also help with this. If you are over 70-and-a-half, don't take this lightly! There are penalties for overlooking this withdrawal.
5. Evaluate your insurance coverage. Maybe you're retired, and you originally purchased life insurance to replace your income. But if that situation no longer exists, does it make sense to keep paying premiums? I have seen retired couples continue paying the premiums just because they felt secure, knowing there would be extra money if one spouse passed away. However, that decision was often made emotionally, rather than based upon a thoughtful review of the coverage. On the flip side, if you have a family, don't be one of those people who feels you can "wing it" and go without insurance. Again, there are too many cases of a breadwinner dying young, and the survivors are struggling financially at the same time they are grieving.
Do these things give you the adrenalin rush of finding a winning stock?
And that's the point.