As we say goodbye to another year, there are always the last-minute things to do. I’m a fan of lists. They help keep me organized and often are the little bug in my ear to make sure things don’t get forgotten or overlooked.
Here is my end of 2024 list and some things for you to consider:
1. Review your will and check if there have been any changes to you or your personal situation that make your will no longer suitable. Important things like a marriage, divorce, new child, and new property are some of the reasons you should review your will. If you do not already have a will, book an appointment with a lawyer to discuss creating one and a power of attorney while you are at it.
2. Look up on your Canada Revenue Agency (CRA) account what your tax free savings account (TFSA) and retirement savings plan (RSP) contribution allowance amounts are. The TFSA contribution allowance is not updated on the CRA system to include any 2024 withdrawals or deposits until after approximately April 1. That could cause you to overcontribute to your TFSA and trigger penalty charges.
3. Review your realized capital gains and losses that you may have triggered in 2024 and note it down so you can figure out if taking a suitable capital gain or loss in 2025 is appropriate.
4. This is a good time to review what your portfolio performance was for 2024. Be careful when you compare your portfolio to the market returns. Be aware that most people do not have an all-equity single market portfolio. If comparing your portfolio that has Canadian and U.S. equity holdings, you cannot make a straight comparison to the S&P 500 index. This is especially true if you hold any cash or fixed income. Be sure you are comparing apples to apples.
5. This is also a good time to check the weightings of your stocks. Check for any single stock holding that is more or near 10% of the total value of your portfolio. No matter how good the investment is, it is not wise to have a heavy overweighting in case that specific holding significantly drops in price in the future. That can greatly impact the total returns of your portfolio.
6. A review of the sector weightings that you have invested in should also be done. It is a good idea to invest in more than just a single sector. At least five different sectors is wise.
7. This is a good time to set up a fixed amount to be regularly deposited into a savings account or, even better, your TFSA. The contribution limit to a TFSA for 2025 is $7,000. Setting up a system to contribute $583 monthly or $269 every two weeks (plus a little in the end), will help you meet that maximum amount.
8. If you do have a TFSA, check how your money in there is invested. It’s great that you have contributed the money, but don’t make the mistake of just letting it sit in cash or in a low interest investment. You can invest that money in the same way that you can in your RSP, Retirement Income Fund (RIF) or investment account. In the TFSA you can own stocks, exchange traded funds (ETFs), mutual funds, bonds, and Guaranteed Income Certificates (GICs), to name a few.
9. For investors, 2024 was a very good year when it comes to market returns, but there are always the investments that didn’t make money like you expected. This is the time to review those poor choices and figure out if they are a worthwhile investment for the future. It is always difficult to sell a stock that is losing money, but having the ability to do that when the future outlook for that investment is bleak is good. Learn to sell with your brain, not hold on with your emotions. Continuing to own a stock that has lost you money is just a constant reminder that you made a mistake.
10. This is not a financial reminder, but I always think it is good to have a current list of any regular medications you may take listed and put in your wallet for any medical emergencies. An emergency contact is also helpful in case it is ever needed. If you have your portfolio at a wealth management firm or financial services company, it would be wise to give them the name and contact information of a trusted contact person. This is a person that your adviser can contact in case you are unavailable or cannot be reached by regular means. This contact person would not have any authority or access to information about your portfolio. But they would be a close person that would know your whereabouts if you cannot be reached by telephone or email.
If you struggle with reviewing your portfolio yourself, it is always a good idea to plan a review with your investment adviser. It’s important to review the past, to help plan for the future.
Nancy Woods is senior portfolio manager and investment adviser with RBC Dominion Securities Inc. Visit her blog, “Nancy’s Notes” at nancywoods.com or send her your question to asknancy@rbc.com
