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About Here’s to Your Wealth

I cover personal finance issues that face Gen X and the Middle Class. I also focus on the financial impact of life transitions such as divorce, job changes, or death of a partner. Each month I will also be sharing a market commentary titled “Here’s To Your Wealth”. My blog... Read more

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5 ways to improve your financial situation

4 Financial Strategies to Consider Before Year End

maximum-401k-contribution-2013With the start of the fourth quarter, it’s a good time to make sure we are executing on our 2016 financial strategies before year end. For some goals, the calendar year end is more of a guideline, but for others, December 31st is a firm deadline.

  1. Maximize your employer’s matching contribution in your 401(k) plan. Many investors don’t realize that reaching the maximum allowable IRS 401(k) or 403(b) limit before year end can cost you money. It is important to know that your employer makes a matching contribution against your salary deferrals into your retirement plan in each pay period and doesn’t necessarily contribute a percentage match against your earned income. For example, if you are receiving a 3% employer matching contribution, and you salary defer (invest) your maximum
    annual allowable 401(k) or 403(b) contribution of $18,000 for 2016 by October 31, then you lose the 3% match you would have received in November and December. Therefore, in order to maximize both your salary deferral amount and your employer match, it’s smart to target a salary deferral amount that allows you to hit your $18,000 maximum contribution level during the last pay period in December.
  2. Tax-manage your investment portfolio. Most U.S. stock market indexes are up for the year, and you may have sold stocks that produced capital gains. Or, if you have mutual funds, some gains might have been distributed during the year. In either case, it might be savvy to realize some losses to offset some of those gains. You can look at your investments, (e.g., individual stocks or mutual funds) that have taxable losses and target those for sale. In the case of a mutual fund, if it makes sense for you, you can also exchange out of that fund and into another mutual fund in the same fund family. A mutual fund exchange into a fund within the same fund family may have lower transaction costs than selling the fund, so consider all your options before taking action. Of course, any tax advice should come from your tax advisor, so please consult with your personal CPA or tax preparer before embarking on any tax strategy.
  3. Review your progress on your 2016 financial goals. A written financial plan is one of the most important steps you can take on your journey to your financial freedom. If you have a written financial plan it is a good start. But keeping it on the shelf gathering dust doesn’t help very much. So take a look and see what action steps might make sense between now and year end to keep you on track with your plan and with achieving your 2016 goals. Then, in December, start writing down more goals for 2017!
  4. Assess your asset allocation and check for any style drift. Conducting at least one annual analysis of your asset allocation makes sense. And with stocks being up for most of the past 7 years, your asset allocation may have changed and may be heavier in stocks than you think. Or, perhaps you been waiting for a lower entry point into the stock market and you are sitting on more cash than you would like. The best way to assess your situation is to complete a full asset allocation analysis. Armed with specific information, you can then decide if you need to adjust your allocations, or you can consult with your advisor to also receive some professional guidance.

These steps encompass four important areas of your financial life: saving for retirement, tax planning, financial planning, and asset management. Being attentive and involved in your planning will help you take charge of your financial life and will help you better understand the challenges you may face on your path to your financial freedom. If these areas appear too complex or if they are simply something that you prefer to outsource, make sure you are working with a competent professional who cares about you and places your interests first.

Mark Avallone, MBA, CFP®, CRPS®.

Securities and Investment Advisory Services offered through H.Beck, Inc., Member FINRA/SIPC. 6600 Rockledge Drive, 6th Floor, Bethesda, MD 20817 301.468.0100. Potomac Wealth Advisors, LLC is not affiliated with H.Beck, Inc.This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. Diversification and asset allocation do not guarantee against loss. They are methods used to manage risk.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
*The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Consult your financial professional before making any investment decision.

Mark Avallone, MBA, CFP®, CRPS®

About Mark Avallone, MBA, CFP®, CRPS®

I am the Founder and President of Potomac Wealth Advisors LLC., an independent financial advisory firm headquartered in Rockville, MD. Previously, I was a Senior Vice President in The Private Bank of Bank of America and as a VP in the Corporate Banking Division of Mellon Bank. I am a CERTIFIED FINANCIAL PLANNER ™ practitioner, a Chartered Retirement Plans Specialist and hold an MBA degree from Rutgers University. I am a big proponent of financial education, and have been an adjunct professor of finance at The University of Maryland University College. I am the past President of the Boys and Girls Clubs of Suburban Maryland. For more information please visit my website, You can contact me at 301-279-2221 or at


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