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The ultimate end-of-year checklist for investors

As the year draws to a close, consider these six smart investment moves to cap off 2024 and set yourself up for success in 2025.
By · 11 Dec 2024
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11 Dec 2024 · 5 min read
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This year has certainly been a good one for diversified portfolio investors. Those who stuck to their long-term plans and stayed in the market have been well rewarded. 

With the end of the year approaching, it's the perfect time to look at your portfolio and ensure you're in the best possible position for the year ahead. 

In investing, doing the little things can make a big difference over time, and as such, here are six investment moves that investors should make before the end of the year. 

1. Check your asset allocation 

The past year has been an incredible one for equities, with the S&P/ASX 200 up 19.0% (23.4% including dividends) for the 12 months to the end of November, and the S&P 500 up 32.1% (33.9% total return) over the same period. 

This is great news for investors, but one small side effect is that it can cause a portfolio to become lopsided towards equities, potentially moving it out of alignment with your risk profile and target asset mix. 

To fix this problem, a rebalance of your portfolio may be needed.  

Some portfolios such as InvestSMART's diversified ETF portfolios are reviewed regularly (by InvestSMART) and then rebalanced if required, so no action by investors is needed. However, if your portfolio isn't automatically rebalanced, then it may be worth trimming a few positions to realign your asset allocation

2. Review your fees 

Like death and taxes, paying fees is a certainty that you can't avoid. However, fees can be minimised, making it essential to review them each year to make sure you're not paying too much. 

You might not be able to control markets but you do have some control over fees, which is why you should look for investments that are high quality but have lower fees.

The size of your fees (including the amount you pay in brokerage fees and capital gains tax), can make a massive difference to your investment nest egg over the long term, so it pays to reduce your fees.

3. Assess your portfolio's performance 

The end of each year is an ideal time to look back and review your portfolio's performance to see how it's tracking. 

With the daily ups and downs in the share market, it can be easy to lose track of longer-term performances. 

The table below highlights the total returns (i.e. growth return plus distribution return) of various broad-based ETFs and provides a good indication of how each asset class has performed as of the end of November 2024. 

Ticker 

Asset class 

1 year 

3 years (p.a.) 

5 years (p.a.) 

IOZ 

Australian shares 

24.63% 

11.14%

9.50%

VGS 

International shares 

30.38%

11.42%

13.34%

IAF 

Australian bonds 

4.98% 

-0.98% 

-0.77%

VBND 

International bonds 

5.45%

-2.68%

-1.05%

VAP 

Property 

38.83%

6.82%

6.24%

IFRA 

Infrastructure 

22.27%

5.79% 

4.50% 

AAA 

Cash 

4.59% 

3.21%

2.15% 

Source: ASX Investment Products monthly update, November 2024

 

As you can see from the table above, returns have varied across asset classes with equities, commercial property, and infrastructure the standout performers for 2024.  

However, as we know, the future can be very different from the past, and that's why it's a good idea to have a diversified portfolio that provides upside when markets are strong, but also offers protection when markets are bearish. 

4. Revisit your investment goals 

One of Stephen Covey's '7 habits of highly effective people' is that you "begin with the end in mind". The idea is that whenever you start a task, you should always have a clear vision of your end goal. 

It's the same with investing. Your goal may be to save for a house deposit or your children's education or have enough wealth for a comfortable retirement. Once you have defined these goals clearly, you can then work out your risk profile and how much you need to save to achieve these goals. 

The end of each year is a perfect opportunity to review your investment goals to ensure you are on track. It can also be a good time to decide if any of your goals need adjusting. Reviewing your investment goals helps you to stay focused on achieving them. 

5. Go over your budget 

With the cost of living rising sharply over the last few years, it's important to have your budget up to date. 

A budget has many benefits, the most important being that it puts you in control of your finances. It shows you the cash coming in and what's going out. A budget can also protect you from overspending and show you where there are opportunities to save. These savings can then provide you with some much-needed financial breathing space. 

It's a good idea to go through your expenses and look for ways to bring costs down. When added together, savings can become quite significant

6. Build your knowledge (and enjoy the break) 

It's always important to be continually growing in your investment knowledge, and no matter how long you've been investing, there is always more to learn. 

The holiday period can be a great time to do some investor education. This could be by reading a good investment book, listening to an investor podcast, or even signing up to InvestSMART's Investment Bootcamp

One further smart move over the holiday period is to simply relax and enjoy time with family and friends. Taking a break is good for both the mind and the body and is a great way to prepare for what will surely be another big year in 2025. 

 

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Philip Bish
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Frequently Asked Questions about this Article…

Checking your asset allocation at the end of the year is crucial because market fluctuations can cause your portfolio to become unbalanced. This can lead to a misalignment with your risk profile and target asset mix. Rebalancing ensures your investments are aligned with your financial goals.

To minimize investment fees, review your portfolio annually to ensure you're not overpaying. Look for high-quality investments with lower fees, as reducing fees can significantly impact your investment returns over the long term.

When assessing your portfolio's performance, consider both the growth and distribution returns over different time periods. This helps you understand how each asset class has performed and whether your investments are meeting your financial goals.

It's a good practice to revisit your investment goals at least once a year. This ensures that your financial objectives are still relevant and allows you to adjust your strategy if necessary to stay on track towards achieving them.

Budgeting is important for investors because it helps you control your finances, prevent overspending, and identify opportunities to save. These savings can be reinvested, providing financial flexibility and supporting your investment goals.

The holiday season is a great time to enhance your investment knowledge by reading investment books, listening to podcasts, or participating in educational programs like InvestSMART's Investment Bootcamp. Continuous learning can help you make informed investment decisions.

A diversified portfolio offers the benefit of upside potential when markets are strong and protection during bearish markets. It spreads risk across different asset classes, which can lead to more stable returns over time.

Taking a break from investing during the holidays is important for mental and physical well-being. It allows you to relax, recharge, and spend quality time with family and friends, preparing you for the challenges of the upcoming year.