10 financial strategies to keep you on track in the second half of 2024

1. Take stock of your portfolio strategy

The stock markets have largely produced positive returns for the year so far, albeit there’s a wide disparity depending on market cap and industry. At the same time, investors are coming to terms with the potential for a “higher for longer” mandate from the Federal Reserve, a shift that has impacted both stocks and bonds, with yields rising in the latter markets accordingly. And finally, in an election year, markets continue to try to price in potential impacts of various outcomes on future economic policy.

With that continuing uncertainty as a backdrop, a disciplined investment approach focused on sound long-term targets remains an appropriate strategy to navigate today’s environment.

Review your investment portfolio and ask these questions:

• How do my overall portfolio allocations compare to my targets? Are there any rebalancing opportunities to consider?
• Are my current cash reserves adequate? Do I need to adjust my balances?
• Are there any opportunistic alternative investments that may be appropriate in light of recent market activity? This may include any opportunistic strategies in certain areas of the debt and private equity markets and where they may fit within your broader plan.

2. Ensure you’re on track to maximize your retirement plan contributions

If you haven’t already checked on the pace of your retirement plan contributions, it’s worth taking a look. Consider these limits when reviewing your contribution levels:

• 401(k), 403(b), and 457 plan participants can defer up to $23,000 of their wages, with another $7,500 possible for those over 50. Total defined contribution plan limits (including profit sharing, employer contribution, etc.) increased to $66,000.
• You can contribute up to $7,000 to an IRA and an (unchanged) additional $1,000 for those over age 50.
• Those with health savings accounts can contribute up to $8,300 (family) or $4,150 (self-only) and another $1,000 for those over age 50.

3. Optimize yield strategies

Savers and investors have a variety of attractive options today to generate yield without taking much, if any, principal risk. For example, brokerage money market funds are yielding more, often significantly so, than checking and savings accounts at traditional banks. Savers should remain wary of holding significant cash balances in banks, paying special attention to FDIC and NCUA limits.

High yields can also entice investors to lean too far into cash relative to what they need in reserve. Keep in mind balancing attractive rates with a sound long-term investment strategy. While cash remains an important part of any investor’s strategy, for funds beyond cash reserve purposes, bonds, stocks, and alternatives may still offer more long-term value.

4. Practice sound cyber identity and security practices

Online cyberattacks and scams continue to grow in both quantity and sophistication, an existing trend accelerating with the growing capability of artificial intelligence tools. Keeping in mind sound family cybersecurity practices can reduce the chance of major breaches and identity theft. For parents, teaching these practices to children who use the internet is vitally important.

And for families using a single or multifamily office operating model, policies and procedures should be evaluated periodically. As the risk environment grows, so too does the need for recurring reviews to ensure security protocol evolves with the changing dynamic.

5. Reaffirm your personal risk management strategy

Review your property and casualty insurance coverages to confirm what’s covered — and what’s not — and determine if any changes are warranted. If you own coastal property, you may be seeing the marketplace continuing to change dramatically in your location. Check with your agent to review your coverages and get ahead of any potential surprises at this year’s renewal if it hasn’t already occurred. And don’t forget about your personal umbrella policy; consider whether your limits are adequate and all appropriate assets are listed on the coverage such as ATVs, boats, and rental properties.

6. Check on any education funding changes

Education accounts require regular evaluation as to whether projected balances align with the evolving plans of young beneficiaries. Additionally, the backdrop for college costs continues to change. Many top-tier schools continue to push forward with tuition increases while some other institutions are starting to protect enrollment numbers through cost decreases (published or, more likely, unpublished). Being aware of marketplace dynamics and beneficiary intentions can help you make informed funding decisions. 

Also note that the Secure Act 2.0 introduced a new planning opportunity for Section 529 plan owners and beneficiaries starting this year. Account holders with excess funds in these accounts may have a new option to help beneficiaries fund Roth IRAs. Note that we still await IRS guidance on logistics and reporting details for this strategy, and each state has the final say on whether such a transfer is a “qualified expense.”

7. Review your estate planning documents

Dust off your estate planning documents and confirm whether your crisis plan still meets your wishes. The review should include the “who” of your plan, such as:

• Who’s named as:
  • Executor and trustee?
  • Financial power of attorney to act on your behalf financially if you can’t?
  • Medical durable power of attorney to make medical decisions for you if you can’t?
• If you have minor children, who’s named as their guardian and conservator?

If you’re a business owner, confirm that any existing buy/sell agreements remain appropriate in light of current business and ownership dynamics. This review should also include funding considerations.

8. Take advantage of available estate planning opportunities

If one of your priorities involves transferring wealth to manage estate tax exposure, don’t forget the nontaxable “freebies,” including:

• Annual exclusion gifts, the limit for which is $18,000 per person in 2024.
• Medical expenses, which can be paid without limitation if you pay the medical provider directly.
• Education expenses, which can also be paid with no limit if you issue payment to the institution and not an individual.

9. Plan now for sunsetting estate tax exemptions

If your family is considering wealth transfer strategies, you should be actively developing and implementing your plan now as the current estate exemption is scheduled to drop in half after 2025. If you’re considering wealth transfer to minimize future tax bills, timing is important, and you may benefit from doing so sooner rather than later.

Those who have transferred all of their allowable exemption in previous years still have another $690,000 per person available this year due to the inflation adjustment for 2024. Check with your advisor.

10. Review your charitable account strategy

Those holding donor-advised funds should check on current balances and determine how much, if any, they want to grant this year. Having a budget in mind helps smooth execution and makes it easier to remember to use these funds throughout the year, as appropriate.

Private foundation (PF) board members may want to revisit investment policy, given the changing forward-looking return expectations in bonds, stocks, and alternatives. PFs that have been more aggressive in recent years to meet return targets in a low-yield environment may have more flexibility going forward than they’ve been accustomed to. These investment policy reviews are also a good opportunity to revisit environmental, social, and governance policies, if desired.

Proactive planning is key

As 2024 evolves, now’s the time to proactively consider the risks — and the opportunities — to help ensure your personal financial plan remains current and effective whatever the future brings.