3 Smart Moves to Make in Your Brokerage Account Before 2025

It's hard to believe, but 2024 is coming to a close quickly. And while it's a busy time of year for many people in the United States, it's also a smart time to check in with your investment accounts to see if there are any moves you need to make before the end of the year.

With that in mind, here are three you might want to consider. Not all of them will apply to everyone reading this, but it's smart to keep them in mind, both now and in the future.

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1. Tax-loss harvesting

If you're an investor, you may already know that you might have to pay capital gains tax on profitable investments. For example, if you invested $8,000 in a mutual fund and sold it for $10,000, you'd have $2,000 in capital gains that could be taxable, depending on your income and if the mutual fund was held in a taxable brokerage account.

What you might not know is that any investment losses can be used to help offset gains for tax purposes. And even if you don't have any taxable gains, losses can be used to reduce your other taxable income by up to $3,000 per year.

Consider this example. We'll say that you have a $2,000 gain on a mutual fund investment like I just discussed above. We'll also say that you bought a stock for $10,000 and sold it for $7,000, giving you a $3,000 loss. This is known as tax-loss harvesting.

Not only can you use this loss to erase the $2,000 capital gain, but the additional $1,000 loss can be used to reduce your other taxable income. Like any financial strategy, there are someimportant rules for tax-loss harvesting to know, and it's not a good idea to sell investments you like just to get a tax deduction.

2. Consider rebalancing

It can be a good idea to check in on your portfolio every so often to make sure your asset allocation is where you want it and to rebalance if necessary. That's especially true in years where stocks perform exceptionally well, as they have in 2024. In fact, the S&P 500 is up by about 30% for the year through early December.

Rebalancing basically means strategically selling certain assets and buying others to maintain the desired allocation.

Think of it this way. Let's say that you set up a portfolio with 50% of your money in stocks and the other 50% in stable investments like certificates of deposit (CDs) and bonds. After an excellent year, your stocks have become far more valuable and now make up 60% of your portfolio. You might sell some of your stocks and shift that money into CDs and bonds to bring the split back to 50/50.

3. Take advantage of charitable donations

The deadline for charitable donations is Dec. 31 each year, but it can be a smart tax-planning idea to donate stock instead of cash or goods. If you donate stock, you get to take a deduction for the full market value, regardless of how much you paid.

For example, let's say that you invested $500 in a certain stock years ago, and it's now worth $10,000. If you donate that stock to charity, not only would you get to deduct the entire $10,000 as a charitable contribution, but you'd avoid paying capital gains tax on the $9,500 profit you'd get if you decided to sell the stock and donate cash.

Just a few ideas

This is not an exhaustive list by any means. For example, retirees may need to take required minimum distributions before the end of the year, and tax benefits for state 529 college savings plans have an end-of-year contribution deadline in most places, just to name a couple more. But the last few weeks of the year can be a smart time to take a look at where your investment accounts stand and make adjustments accordingly.