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This Year, Don’t Neglect to Conduct a Mid-year Portfolio Review

You’ve likely heard this advice before: At the halfway point of the year, review your financial portfolio to ensure you’re on course to meet your objectives. This year, though, it is particularly vital.

During the past year, the financial markets have provided investors with a roller coaster-like ride. In 2021, the stock market continued to set new records, while investing in risky options such as bitcoin and SPACs paid well. Today’s outlook is drastically altered.

The S&P 500, an index often considered as a measure of the overall performance of the stock market, entered a bear market in June, falling at least 20 per cent from its most recent high.

The share values of pandemic stock winners like as Peloton and Zoom have fallen by more than 70 per cent and 40 per cent, respectively, in 2022, and ten of the eleven S&P 500 sectors have also declined.

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The volatility can be frightening for novice and seasoned investors alike. Fortunately, according to experts, frequently reviewing your portfolio — once a quarter or once every six months — can contribute significantly to your long-term performance. Now that we have reached the midpoint of 2022, it is time to take that step.


“According to Lauren Wybar, senior wealth advisor at Vanguard, 2017 has been unlike any other year in recent memory. Compared to what we are accustomed to, this is uncommon.

Here are the factors to consider when conducting a portfolio review around the midpoint of the year.
Tax advantages

If you make a few astute tax moves this year when the market is down, you may be able to reduce your tax liability in April.

According to Charlene Wehring, founder of Wehring Wealth Management and certified public accountant, taxes are the highest expense for the majority of individuals. Every financial decision has a tax implication.

Wehring suggests determining if your portfolio has losses that could be offset through tax-loss harvesting.

Essentially, tax-loss harvesting allows you to sell an asset when its price is lower than when you purchased it and use the loss to offset gains in other areas of your portfolio.

This can be advantageous since when you sell a capital asset, such as stocks or cryptocurrencies, you must pay taxes on the profit.

The Internal Revenue Service permits taxpayers to deduct up to $3,000 in regular income losses from their gains and carry forward losses to future years if necessary.

Remember that there are constraints if you choose to collect tax losses. You cannot sell a falling-priced stock and immediately repurchase it, or one that is “essentially identical.” “immediately return Ensure that the benefits exceed the dangers in light of your unique financial condition.

Consider converting your traditional individual retirement account (IRA) to a Roth IRA as part of your portfolio evaluation at midyear.

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A typical IRA is funded with pre-tax cash, and you pay taxes on withdrawals later. A Roth IRA, on the other hand, is funded with after-tax earnings, so withdrawals made after age 59 1/2 are tax-free.

If you want to be able to withdraw your funds tax-free in the future, you may wish to convert your IRA into a Roth IRA.

Since you must pay taxes on the funds in your IRA, it may be better to make the conversion now, while your account balance is likely lower than it has been and will be in the future.

Wehring explains, “They can convert with fewer repercussions.” Your Roth account will recover tax-free as the market recovers.

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