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Wealth Planning

10 tips to help you make the most of your 2022 year-end planning

This year, you’ll want to start getting your financial house in order as early in the fall as possible.


With so many stressors affecting personal finances now—higher market volatility, interest rates and inflation—we recommend that you take control by beginning your 2022 year-end planning as early as possible this fall.

Give yourself time to consider all your options and to make decisions that will best serve you and your family.

To help you in this effort, we offer these 10 tips.

Make sure you’re on the right track

1. Take a good look at how you felt this year. Last year, the market enjoyed many highs, but in 2022 it has been on more of a rollercoaster. How did you feel about your portfolio this year? Behavioral scientists remind us that we all tend to feel losses more than gains, and that uncertainty is unsettling; a year of volatility naturally leads many to second guess their investing strategies.

Now may be a good time to take a fresh look at whether your portfolio matches your real risk tolerance and whether or not market volatility actually does put your financial goals at risk—or if it just feels like it does.

2. Analyze your portfolio and financial plan. Does your strategy still work toward your goals? Make any tweaks needed, but don’t be blinded by any short-term volatility. Keep your eyes on the long term. Focus your equity investments on high-quality companies with strong balance sheets and sustainable earnings. Consider active managers that might reduce your portfolio’s volatility and help it outperform.

3. Determine how much cash you should hold. Higher interest rates mean it’s more important to look at where you’re keeping your liquidity. Today’s CDs, money markets and fixed income products now may offer you more yield than cash, which can help offset inflation’s drain on your dollar’s value. So identify how much cash you really need for your operating cash flow, as a psychological safety net, to fund large capital expenditures or so that you have “dry powder” for opportunistic investments.

Then, as you put excess cash into longer-term investments, you may want to set up an additional safety net by establishing a portfolio line of credit. Even if you never use it, having access to funds can create peace of mind and avoid having to sell investments at the wrong time.

Strengthen your finances

4. Assess your life insurance needs and policies. If you have life insurance policies, review them to make sure they still are in good health and will work to support your financial goals and estate plans. Market volatility and crediting rate or dividend rate changes can deplete some policies’ cash value and create risk for you that the policy will not maintain its expected cash value or, later, its death benefit.

If you would like to review your policy or don’t have life insurance in place, speak with your J.P. Morgan team about whether policy adjustments or additions would be advisable. Many people with illiquid estates have life insurance to pay the estate tax. Life insurance also can be beneficial for wealth transfer, business owners, and as part of a portfolio of financial assets.  

5. Improve your portfolio’s tax efficiency. We expect markets to deliver more modest returns and experience greater volatility during the next decade or so. As a result, saving on taxes is more critical. First, make sure your assets are in the right types of accounts, as having an asset in the right place can dramatically affect your tax exposure. The general rule is that you want to hold tax-inefficient assets inside tax-advantaged accounts such as a 401(k) account or IRA. To see the types of assets that work best in these accounts, see our article here.

In addition, accounts that are built to continually harvest tax losses can help you keep more of your returns.

6. Complete any annual to-dos. Every year, some things need to be completed before year-end to maximize tax efficiency in furtherance of individuals’ financial goals. Here’s a short checklist for you to see which might apply to your circumstances:

  • Retirement accounts—Make sure you fully fund retirement accounts to take advantage of their tax-deferral benefits, and consider whether you want to convert traditional IRAs to Roths
  • RMDs—If you must take required minimum distributions, take those before year-end; otherwise, you will face a hefty penalty
  • Gifting—Consider whether you want to make annual exclusion gifts to family members or make charitable donations
  • Fiduciaries and trust distributions—Investigate whether it makes sense to change trustee or other fiduciary appointments, or time distributions thoughtfully, so your trusts are as income-tax-efficient as possible
  • Private foundations—if you have a private foundation, you’ll want to make sure it has fulfilled its 5% annual distribution requirement

7. Prepare yourself for higher interest rates. Rates have risen steadily this year; more hikes may come. It’s a good time to focus on core fixed income as a portfolio ballast against adverse economic outcomes.

If you are considering wealth transfer strategies such as grantor retained annuity trusts (GRATs), intra-family loans, and charitable lead annuity trusts (CLATs), look to fund these soon (i.e., before any additional rate hikes).

By historical standards, borrowing rates are still relatively low. However, there may be a way to reduce your effective borrowing cost. If you’re thinking of buying a home, you might consider paying for it in cash, and sometime later borrowing against the fully paid-up residence, using the proceeds for investments. Doing so would allow you to classify interest on the loan as “investment interest”—which you can deduct fully against your investment income. By contrast, interest classified as “qualified residence interest” is generally limited to interest on no more than $750,000 of acquisition debt.

Help the people and causes you care about

8. Measure your gifting capacity. First, quantify your gifting capacity so you can gift confidently without impairing your own financial future. Then consider all your options.

Volatile markets create a great opportunity to gift “beaten up” assets directly to family members (or in trusts for their benefit). Gifting battered assets before they rebound would move any future appreciation off your balance sheet. You can potentially gain an even greater benefit by gifting illiquid assets (such as shares of a private business) at depressed values in order to receive additional discounts.

If you want to donate to charity, consider giving to a charitable vehicle such as a donor-advised fund (DAF). A DAF can offer flexibility if you’re looking for a way to streamline your gifting or “pre-fund” many years of charitable giving in a high-income year when the deduction might serve you best.

9. Connect with family. Plan now to hold a family meeting during the upcoming holidays. Use the meeting to reconnect with family members, share family values, provide an update on family finances, and discuss hopes and aspirations for the short and long terms.

You may want to take time to discuss this year’s historic market volatility with the entire family—but especially with the younger members who’ve experienced only bull markets in their lives as investors. Help children and grandchildren make a plan for their lives that sets them up for future success and communicates your expectations. 

10. Reinforce your cybersecurity. We often see more cyberattacks and attempted fraud during volatile times. Scams have become very sophisticated and prey on our natural willingness to be helpful. Your defenses also must evolve, especially as your attention is pulled in different directions during the holidays. To learn more about how to protect yourself, your family and your business from cybercriminals, please contact your J.P. Morgan team.

We can help

Year-end planning touches on many aspects of your and your family’s financial lives. Your J.P. Morgan team is here to help and work alongside your professional advisors to close out your 2022 and prepare for the year ahead.

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