Money Matters with Greg

Episode 171: Year-End Money Moves

• Greg Farrall • Season 4 • Episode 171

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A stronger-than-expected market can make us feel confident, but the real wins show up when our tax and savings decisions are just as intentional as our investments. We open with what actually moved the indexes lately—resilient earnings, AI noise, and surprising consumer strength—then translate that backdrop into a practical, year-end playbook you can act on before December 31. The goal: keep more of what you earn, compound with less friction, and enter the new year with a cleaner, calmer financial plan.

We walk through the highest-impact moves first. Max your 401(k) match and revisit whether pretax or Roth contributions fit your bracket now versus later. If household income is down, consider a partial Roth conversion and set an early-December paperwork deadline so it actually gets done. Understand the new RMD age under Secure Act 2.0 and how Roth IRAs avoid lifetime RMDs. Then layer in health and education tactics: fund an HSA for triple-tax benefits, review FSA rules so you don’t forfeit funds, and use 529 plans for tax-free education growth and potential state credits, with an eye on the updated rollover rules that reduce the risk of overfunding.

We also dig into tax-efficient investing that compounds quietly. Place high-turnover funds and taxable bonds in tax-advantaged accounts, lean on index ETFs in taxable, and consider municipal bonds if your bracket warrants it. Before year-end, request mutual fund distribution estimates to avoid surprise tax bills, and double-check if tax-loss harvesting suits your situation. For those eyeing a move, evaluate total tax burden before changing residency; low income taxes can be offset by higher sales or property taxes. Throughout, we share how we stay invested with minimal idle cash, focus on trends with real earnings, and use checklists to beat calendar risk.

If this helped you plan your next move, subscribe, share the show with a friend who needs a nudge before year-end, and send us your top question—we might feature it next week.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.

The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may suit you, consult the appropriate qualified professional before deciding.

SPEAKER_00:

Welcome to Money Matters with Greg, where we dive into the money conversations shaping your life. From investments to estate planning, insurance to taxes, we cover it all with a fresh perspective. Join Greg and his guests each week to get inspired and take control of your financial future. Let's get started. Securities and investment advisory services offered through LPL Financial, a registered investment advisor, member PinRES IPC.

SPEAKER_01:

I'm Greg Farrell, CEO and owner of a wealth management firm called FaroWealth here locally in Valparaiso, Indiana. And we manage money for multiple families, high net worth families and uh and their businesses uh nationwide. Uh we're based in Valparaiso, but um we work with clients in over 24 states. Try to bring many of the things in this show and money matters, things that matter to you and help you throughout your days to create your wealth, grow your wealth, protect your wealth, and distribute your wealth in lifetime and after death. We're very excited to be here today, uh, broadcasting on WVLP103.1 FM. And then also anywhere you pod, we transfer it to podcasts. You can also find it on your YouTube channel and anywhere else as far as our socials uh out there. At Farowealth, you can find us. You can also email me, Greg at Farowealth.com. We'd love to have you on board. And uh if you have any questions or any topics you would like to be able to uh add, feel free uh to uh email as much as possible and uh and help us out with some ideas and maybe things you might want to be able to talk about. Today we're gonna talk about year-end planning. Important to talk about these things ahead of time, uh going into December 31st and not leaving things to to chance and to happen stance. We're gonna talk about the stock market a little bit, about where we are right now initially, and then uh also make sure you just have some steps for year-end. But first, because it is the day after Veterans Day, and I want to make sure you uh we recognize the fact that uh Veterans Day was uh yesterday. We're very proud of our veterans. We want to thank our veterans for everything that they've done uh and given uh the the uh ultimate sacrifice um and served uh throughout the the years. Thank you all. Also very thankful here going into Thanksgiving. I'm thankful for our clients, thankful for our uh 2025, thankful for uh the SP 500 being up higher than we certainly envisioned, did not see this coming. We're up uh we were suggesting about seven to eight percent in the SP, and uh it's up double that now. And um, I think everybody on the street, including us, was wrong. And uh we're okay with admitting that we're wrong, uh especially to the upside, uh, for sure. We did not see uh or foresee such a um exuberant uh year after two years of uh wonderful returns just in the in the past. So hope you are fully invested. Hopefully you are still following along with some of the things we've been talking about as far as being excited about the market. We're not really seeing anything as far as blemishes. Earnings have been coming in, third quarter earnings have been coming in in a very solid, solid numbers. Stocks were missed mixed Tuesday this week. Uh Monday's big gains were digested. There was a big, huge rally on um on Monday. There was some AI news that actually happened and a soft labor market, uh, soft labor market data that came out, but solid earnings guidance from many uh different firms, especially the global uh um well, the SP was 500 was only up a modest uh 0.21 on Tuesday, but it was up uh more than almost 2% on Monday. Most equity uh benchmarks gapped lower at the open uh here this week, with tech shares leading the way as uh news broke that SoftBank had closed out its entire stank of Nvidia to quote unquote explore other AI investments, like to know what those are, while emerging really just AI-focused cloud computing company CRW cut guidance due to supply chain bottlenecks. Now, the broader market continued to fall in early trading this week thanks to a downbeat uh weekly ADP release that uh revealed uh a likely decline in the U.S. labor market in October. Uh however, the SP 500 began to kind of stabilize uh and the index uh approached a psychological and very derivative-sensitive 6,800 level uh by mid-morning after the Mag 7 member of Google that announced that it had a$6.4 billion investment to build a cloud data center in Germany. So that was very positive, which uh that would create 9,000 jobs annually through annually through 2029. So that was really good news. The market really kind of continued to stabilize and the SP uh ultimately turned higher uh late morning as uh investors kind of cheered the strong guidance from logistics behemoth FDX, uh specifically through the uh holiday season, which really sort of eased concerns about the health of the U.S. consumer. The SP 500 kind of lost a little momentum in the afternoon. So it was a just a volatile day. Ultimately it was penned about 6850, which is what we're seeing as pretty much fair value um brawl as far as the market goes. I just wanted to just quick that just a quick update of where we are. We're at 6850 on the SP. And so far, so good as far as the years go. We're again, we've been very cautious watching earnings. Earnings are all about uh everything to us. And uh in the dot-com boom, dot-com bus that I traded through as a market maker at the Chicago Border Options Exchange, we had prices, we had no earnings. So prices were high, earnings were terrible or negative. Now we have prices and we have earnings. So things look a little bit more expensive than they certainly should uh appear, but we continue to see positivity and positive uh positive numbers to be able to make sure that you should stay invested and ultimately follow your plan that you have. Rest assured, right now, going into 2026, um we're we're we're we're fully invested. We only have about 2% cash for most clients across the board. We are anxiously looking at different asset classes and researching those asset classes we'd like to be able to get a piece of that we think are a trend. That is your job as an investor and our job as investment advisors, as to make sure that we have a trend, follow the trend, ride the trend, and uh and make money off a trend as much as possible. Again, the show just is money matters for Greg. I'm Greg Farrell, CEO and uh owner of Fairwealth. Uh, this is our 171st episode. You can find us on Spotify, Apple, and anywhere you pot, but also on 103.1 FM W VLP here locally, uh broadcast at uh uh one o'clock on Thursdays and Saturdays replayed uh again on uh at one o'clock. Very excited always to be a part of the WVLP family. So in talking with many advisors and ultimately clients throughout the year, we all know that it's very, very important to make sure that we're talking about taxes and year-end planning. And there is no getting around the fact that we must pay taxes throughout our lives and implementing strategies to really help control those, those to manage taxes is really a critical component to any financial plan uh across the board. And by taking advantage of those opportunities to reduce your taxable income and potentially maximize tax deductions, you can really redirect money to other financial goals. And that's what I want to talk about today, here in the week of November 10th, you know, getting ready for the end of the year is really, really important. And basically coming up with a game plan as to sort of minimize the taxes if possible if you have options to do that. So in addition to leveraging tax-efficient investing strategies, you can really potentially reduce the taxes you pay in retirement. And as we approach the end of the year, consider this a list of tax planning strategies, even though we're not accountants and don't play one on TV. Uh, we didn't sleep at a holiday in an express last night. So never going to talk about uh taxes in that realm as a CPA, but we do have to consider tax planning strategies as investors uh every single day uh of the year and throughout retirement for sure. While not all of these conversations may be appropriate for your situation right now, it's worth discussing that your financial with your financial advisor, how they might fit within your financial plan. We always talk in our world about giving people options and making sure some of those options are gonna stick, some of those options are gonna be great, some of those options work, but some options don't. So at least we're educating and helping clients adding value and making sure that some might work and they might actually be very, very beneficial to a financial plan, not only now, but in the years ahead. So some of the retirement savings strategies that uh I'm gonna suggest here, and you just follow up as far as the end of the year, is one, very, very simply, make enough retirement plan contributions to at least capture the maximum employer match that you might be receiving in the 401k. This will reduce your taxable income and then ultimately capture free money. So if you're married and one of you is currently working, uh the working spouse can still make spousal IRA contributions by April 15th of the following year, subject to certain rules, of course. But I always like to be able to mention that as well. You want to consider contributions to Roth savings vehicles, potentially tax-free withdrawals down the way, down the line. As we know, Roth is uh tax-free withdrawals if you if you qualify for that. And don't ignore long-term benefits of a non-qualified investment portfolio funded with after-tax savings. Only your long-term capital gains and qualified dividends are taxed in those situations. So that is a lower rate depending on your overall. It's it's a lower rate than ordinary income across the board for everybody. And it's lower on it's a lower tax rate on IRA withdrawals as well. So in the lower income years, one of the things we always like to mention is to consider converting traditional pre-tax retirement accounts to Roth accounts. This helps in a year that you've made a little bit less income and the math really works. Obviously, you're gonna sit with a professional and talk about what that might be. You don't have to convert all of your IRA, you can convert part of it. And certainly that might help really help in retirement and start thinking about maybe converting by the end of the year. Most applications for converting by the end of the year have to be in by December 5th. So that's really important that you're talking and getting that done here in the month of November. And that upfront tax bill that you're going to get because you ultimately have to come up with the taxes that you convert, it might help by the potential future growth during that tax-deferred compounding. So all of that money is going to be converted and then it's going to grow tax-free throughout the rest of your life. So also, in addition, auth accounts have no RMD requirements. We talk a lot of RMDs at the end of the year to make sure that everyone's clean and done and they have all their RMDs out. If you're 73 years or older, that's changed from 70 and a half and now it's gone up to 72. And now today it's in this year's 73. It's going to 75 by the year 2030, unless things change. So that came about in the Secure Act 2.0. And it was probably one of the best, in my personal opinion, it's one of the best pieces of legislation that's come out of Washington because it helps all Americans save money. It was a bipartisan bill that really all politicians can agree on little or nothing. And now that we have the government shut down, looks like the how it's going to go through the House today, as far as a vote goes, it's nice that everyone's going to be able to get back to work. They might agree on very little, but they can't agree on the fact that Americans don't save enough money. And having uh a longer time to save money, a longer time to put money away at higher contribution limits as one of my favorite things about the bill. And I wish it would even go higher. But that's we'll see. Anyway, with a ta with a Roth, you have no RD requirements. And ultimately any withdrawals are might be tax-free if invested correctly and within the right time. So really something to think about by the end of the year, especially if you've lost your job and uh have lesser income uh in 2025 for whatever reason. Certainly might be something to consider converting some of your IRA money into a RAW. Again, another one is contributing to flexible spending accounts and HSAs, FSAs, and HSAs at work. Your contributions are made with pre-tax dollars and distributions for qualified medical expenses are not taxable. So, really, really nice to be able to do that. Just make sure you remember to do it by the end of the year. Consider doing that before December 5th as well. I like to have a deadline at December 5th for all things because then things can't get messed up as far as paperwork or whatever it might be. It's one of the things we set up at Faro Wealth is get everything in December 1st, December 5th. Let's talk about it. Also, next thing is you want to consider establishing 529 accounts for potential tax benefits. Although your tax, your contribution is not tax deductible, the growth in the funds that you own is not taxable when used for qualified education expenses. So again, very much like a Roth, 529 grows tax-free. And as long as you use it for educational expenses as well as secondary school expenses, uh, up to$10,000, um, you can uh uh use that money, but it grows tax free. Something to think about as far as$529 balances over$10,000, they reduce financial aid by 5.64%. Um, so when you're filling out your FAFSA, yes, that does matter, um, but it's still one of the best ways to save education due to tax advantages. Some states also offer tax credits or other tax advantages. Every state is different. So I highly recommend you look into your state and figure out what uh what tax advantages you might have. Here in the state of Indiana, the tax credit is a 20% of contributions up to$7,500, which is a$1,500 credit. So 20% of$7,500 is$1,500. And uh that's it's really nice. It's a great credit. But your$529 beneficiary can be anyone, uh, both family and non-family members. Overall, your grandparents can do$529 accounts, and$529 accounts owned by grandparents or others are not included on the FASFA form as well. So that's just something to think about. And then any leftover funds you might have that can be rolled into an IRA for the beneficiary of the benefit of the beneficiary, subject to certain rules. Uh, that is also a new rule that came about during the Secure Act 2.0. So consider strategies and vehicles that really allow you to invest more tax efficiently, is the next one. These are known as asset location in our world. And for example, municipal bonds are generally free from taxes at federal, state, and local levels. If applicable, it's something to think about. If you're going to invest in tax-free vehicles, that's something to consider as far as municipal bonds. If you're in the high net worth side, you want to consider how that might affect your AMT. However, and if that does kick you into an alternative minimum tax uh threshold, again, we're not accountants, don't play one on TV, but consult your uh consult your tax team, consult your overall team, your financial advisor as well to make sure that maybe something like this might be considered as far as an overall investment. One of the things that I want to also mention, too, is stock mutual funds with high turnovers. So they might be selling a lot and moving in and out a lot of things as far as investments. Those that have high turnover might be kicking off tax deferred or might be kicking off taxes in the sh as short-term gains coming here at the year end. So every mutual fund family is printing their possible, well, most recent taxable rates that they're going to pay. And there's nothing more frustrating for clients to invest in a mutual fund and then lose money and then have to pay taxes on all the turnover that the mutual fund manager created. So you really want to make sure that you know that any of mutual funds will be coming with taxes. Most of the time, they're minimal, especially with tax-efficient strategies as far as ETFs and indices. But you really want to make sure that you're cognizant of the fact that that could be coming. So it's always nice to ask and make sure that you have an awareness and you aren't blindsided with a big tax bill at the end of the year that you didn't even know was going to happen. So you ask your advisors, make sure that you know, is there a big tax bill coming for this mutual small cap mutual fund that I a large cap mutual fund? I'd like to know. And then finally, depending on your income, I always like to be able to mention considering a residency change to low or no income tax states. Obviously, you need legal guidance on this and you want to research all the taxes of these states, but please be aware that some states make up for low income tax with higher sales and property taxes. Uh, so you really want to make sure that you're doing your homework in regards to um all of that. So that is my list for the year end. Here again, I'm Greg Farrell, CEO and owner and financial advisor at Faro Wealth. It's a wealth management firm here locally. Uh, I hope you've enjoyed this uh show here to Money Manager Greg. Please email me with any sort of content, any sort of questions uh and any sort of topics you'd like to be able to talk about. And again, thank you to WVLB, WVLP 103.1 FM for having us today. I certainly listen here at locally Thursday at one o'clock, then replayed on Saturday at one o'clock Central Time. And then you can also find us anywhere you pod, Spotify, Apple, uh, YouTube, you name it. So thanks again to everybody. Thanks to you uh for once again, thanks to our veterans and thank you for this Thanksgiving spirit that we're coming in here. We're very, very thankful through all of our um clients and friends, and also extremely thankful for our Indiana Hoosiers pulling one out of state college. It's never easy to win at state college. We've never won there, and it was uh a magical game, and uh we're very thankful for our Hoosiers to being 10-0 going into this weekend. So uh just had to get that in, you know, a little bit of plug. So we are very thankful for that. Uh hope everybody's well. We'll talk next week. See ya.

SPEAKER_00:

Thanks for tuning in to Money Matters with Greg. We hope you gained some valuable insights today. Remember, your financial journey is personal, but you don't have to go it alone. If you enjoyed the show, be sure to subscribe and share. Until next time, here's the making your money work for you. Securities and investment advisory services offered through LPL Financial, a registered investment advisor, member FINRA SIPC.

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