Here’s Your 3-Point Brokerage Account End-of-Year Checklist to Set Yourself Up for Success in 2024

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It’s time to give your brokerage account some of your attention. Read on to see what items you should be focusing on. 

Your brokerage account is not something you should be checking every day. Peek in too often, and you may find yourself tempted to react to stock market volatility. That could cause you to make rash decisions that result in needless losses.

Instead, it’s a good idea to review your brokerage account every few months. And it’s especially important to take a closer look toward the end of any given year. As such, in the coming weeks, you should make a point to review your portfolio — and take these specific actions.

1. Compare your portfolio’s return to the broad market

As of this writing, the stock market, as measured by the S&P 500 index, is up about 12% year over year. Now, that doesn’t necessarily mean that you’re going to see a 12% gain in your portfolio. But it does pay to compare the performance of your investments to that of the broad market. If there’s a huge discrepancy, you may want to take a deep dive to see why your personal mix hasn’t been doing as well.

To be clear, you can probably leave your portfolio intact if you’re otherwise happy with it and are seeing a 10% or 11% return over the past year. But if you’re only seeing a 2% return or, worse yet, a negative return, then it’s time to see which stocks of yours are the worst performers and why. You may also want to replace some poorly performing assets with shares of an S&P 500 ETF if you don’t expect those investments to start gaining value.

2. Make sure your investments are still diversified

Over time, stocks can gain and lose value. So what might happen is that you start off with a diverse investment mix, only to have things get skewed due to certain stocks of yours gaining a lot of value while others drop in value.

Now’s a good time to make sure your portfolio is as balanced and diversified as you want it to be. Because the broad market is up right now, it may be a good time to sell off some assets for a more even mix. So if you find, for example, that your portfolio suddenly comprises 45% tech stocks, you may want to sell some shares now and replace them with shares from other industries.

3. See if it makes sense to dump losing investments before the end of the year

It may be that your brokerage account contains a few stocks that have just consistently lost value since you acquired them. Not every stock can be a winner, and there’s no need to beat yourself up if you make a bad call here and there.

But one thing you should know is that selling off a losing stock before the end of the year could benefit you from a tax perspective. So if you have an asset that’s unlikely to recover, the time to unload it is soon — before 2023 wraps up.

Let’s say you decide to sell a stock this December at a $2,000 loss. If you have a $2,000 gain in your portfolio, that loss will cancel out your gain, getting you out of paying taxes on it. And if you don’t have investment gains to offset, you can use a loss to offset up to $3,000 in ordinary income each year.

As you’re busy counting down to 2024 and finalizing your holiday plans, take the time to give your brokerage account a close look. The moves you make in the coming weeks could really set you up for a more financially successful year ahead.

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