Can you believe that 2024 is almost over?! It is true that years go by faster as you get older. I am 51 years old this year and 2024 passed. Mrs RB40 and I still feel like we are in our 30s! It’s crazy how old we are, but we’ll be 70 before we know it. Wow! However, we should enjoy ourselves no matter where we are in life. You never know how much time you have. This is why I like to retire early. The last 12 years have been pure gravy. I would hate to sit in a cubicle at Intel all that time. (I scream “HELL” every time I drive past their buildings. Hahaha.)
Anyway, the end of the year is here. Let’s do a little savings to put everything on the mother. 2024 was a good year for investors. The stock market went through the roof! I’m sure everyone’s portfolio is pretty fat with stocks if you haven’t balanced it recently. That is the first order of business.
Rebalance
I was very lucky in 2024. Earlier this year, our 1 year US Treasury Bonds matured and I moved the money into stocks. At the same time, I am rerating almost all the bonds in the stock. I’m disappointed in bond funds because they’ve been behaving strangely for the past few years. As a result, we had 95% in stocks, 5% in alternatives (real estate), and very little in bonds. Fortunately, the stock market had a banner year and our portfolio benefited from my bare bones move. In general, you should stick to your asset allocation plan and rebalance only once a year. Overthinking your portfolio can be dangerous.
The stock market rose sharply after Trump won the election. That’s great, but I think it’s overheated now. The Shiller PE Ratio is at an all-time high and I’m starting to panic. So I’m working on rebalancing our portfolio back to my target asset allocation. We are growing so allocating bond money is probably a good idea.
2025 Allocation of target assets
Here is my target stock allocation for 2025.
- 75% US shares
- 5% International stocks
- 15% bonds and money market
- 5% other methods
For the past few weeks, I have traded stocks and invested in bonds and money market funds. This rebalancing is done in our tax sheltered accounts to avoid tax. We’re almost there.
The 80/20 stock/bond asset allocation is moderately aggressive, but we don’t plan to retreat for at least 5 more years. When we are both fully retired, I’ll be more frugal and go 60/40.
Prepare for tax season
December is also a good time to clean up your investment portfolio. Unfortunately, I rarely pay attention to individual stocks anymore. I have many other things to do. Eventually, I plan to move most of our investments into passive index funds. Currently, we still have a lot of each stock. Most of these stocks have done very well and I don’t want to sell them because it will be a taxable event. However, there are always a few bad apples in the basket.
It is a good time to sell the losers and close the losses by taking some profit. Recently, I traded in LEG, NLY, and WU. Hello! I made this loss by taking profit from DIS and EMN. Profits flowed into I-bonds to strengthen our bond portfolio.
You can deduct up to $3,000 in capital losses each year. Sell those lost! You can always buy them back in January if you want them in your portfolio. You need to wait 30 days to avoid the wash sale rule.
Complete a Roth IRA and 529
In 2024, the Roth IRA contribution limit is $7,000 for those under 50. If you’re over 50 like me, you can donate up to $8,000. A Roth IRA is the best retirement account because you don’t have to pay taxes when you withdraw from the account. Everyone should withdraw from their Roth IRA every year. If you haven’t increased your donation yet, now is a good time to do it. Actually, the 2024 deadline is April 15th. But I like to contribute in the same calendar year to keep it simple.
We try to contribute to our Roth IRA as early in the year as possible. This gives our investments more time to grow. If you’ve already phased out your Roth IRA in 2024, it’s a good time to get some cash in 2025. It’s not easy for most of us to come up with an extra $8,000. I will sell the investment to prepare myself.
The same applies to a 529 College Savings account if you have children.
Check out real estate crowdfunding
Recently, I heard that the real estate investment market is starting to improve. That’s great because we invested $115,000 in real estate crowdfunding. In the last few years, I didn’t want to add money because real estate was not guaranteed. Now that the picture is improving, I will look at Crowd Street and see if there are any good investments. I would like to invest in apartments and high-rises.
In particular, senior housing should be a good investment for years to come. The Baby Boomers are growing up and most of the wealth in the US is concentrated in that generation.
Another reason I want to look into Crowd Street is because I plan to sell our rental condo next year. Our tenant is leaving and I no longer want to own the property. Portland’s condo market is booming. This condo is worth about $200,000. That is the same price as when it was converted to a condominium from an apartment in 2006. We got it during foreclosure in 2011 so we paid less than that price. However, the notification is ignored. From now on, I will leave real estate investing to the professionals. I’ve never had much luck with direct ownership. Any real estate I own I never really valued. That’s funny in this crazy housing market.
A variety of things
That’s about all of our savings. Here are some things that may be more relevant to your situation.
- Minimum Distribution Required. You need to take an RMD at the end of the year.
- HSA money.
- Roth IRA conversions.
- Selfless giving.
- Increase umbrella insurance. This is not dependent on the calendar, but it may be a good time to expand your umbrella coverage. 2024 was a good year for investors and the value of everything is much higher than the last time you spoke to your insurance agent.
Okay, that’s all I have for today. Let’s do everything this week. Then we can relax during winter break. Did I miss something?
Have you weighed lately? How much is your property allocated?
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A minimum wage is the key to early retirement. This year, Joe is investing in real estate with CrowdStreet. They have many projects all over the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools to help you achieve financial independence.
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