Planning For The Close Of 2022

Co-produced with Treading Softly

Have you ever met an incredibly organized person? Unlike unicorns, they do exist, if you are lucky enough to spot one.

I have an admission to make: I personally am not incredibly organized. This may surprise you as I operate High Dividend Opportunities, with over 6000 members, and it runs like a Swiss watch. I have to give credit to my team, together we run a tight ship, but in my day-to-day life, I’m less organized.

I thought I was, but recently my wife went on a trip and I had to take over her responsibilities as well as my own. Little did I realize how much she does daily and apparently exceptionally efficiently as she still finds plenty of time to spend with me!

The year is rapidly coming to a close. We have Halloween, Veterans day, Thanksgiving and Christmas left on most of our calendars before we flip the page and enter into a brand-new year.

Have you thought about all you want to accomplish in your portfolio before the year ends? For some of you, this is the first year running your own portfolio and likely didn’t think you had anything you’d want to do before the year ends.

Well, let’s talk about some different considerations together as we consider the closing of the year!

Tax Loss Harvesting

2022 has been a real downer of a year for many people’s portfolio value. I get it, the year has been more negative than positive overall for most. This means it is an excellent year to offset taxable dividends and earnings via tax loss harvesting.

This tax offset technique involves selling holdings, at a capital loss, to use the loss to reduce one’s tax liability. If you engage in it, my main recommendation is to get it done early. Why? You want to be buying back those positions – after a 31-day cooling-off period – when everyone else is selling them to harvest losses. This will reset your cost basis and may allow you to get a higher yield upon return.

I do not like market timing, but if you’re already selling to harvest losses, it only makes sense to be prepared to benefit from others’ selling. If you don’t want to reduce your income during the period, swapping from the common to the preferred equity of a company can be used to later swap back. Helping maintain an income while harvesting losses.

Set a 2023 Income Goal

With most of 2022 in the history books, you should be able to see the income you’ve generated thus far and in turn, make a goal for next year. I would even make a goal for how to finish out 2022. We do have many monthly paying picks to help finish off 2022 on a high note and get a great springboard for 2023.

I personally have an Excel spreadsheet that I input my monthly dividends into and can see how each year stacks up against one another on a month-to-month basis as well as annually. It helps me focus on growing my income stream plus highlights if I have some weaker months to be prepared for – budget-wise – or as target months to boost my income by reinvesting in targeted securities.

We recommend investors reinvest 25% of their income stream – at a minimum – to keep their income growing. This is a long-term target, but the more the better overall. When the market is down, I would encourage investors to plow more money into fixed-income opportunities with high yields and strong coverage. We highlight those ideas weekly in case you need some ideas!

I have found goal setting as one of the best ways to keep one’s focus on the right metrics. It’s easy to have a wandering mind and attention when you don’t have a clear point of focus. Have you ever been driving and get distracted by something on the side of the road? When you look at it, you naturally drift in that direction. Set your mind on your goal to give you a fixed place to push towards. The clearer the objective the better. This goal being an income goal can be a stepping stone to your larger goals, ones that may be more nebulous in nature but help keep you heading in the right direction.

Embrace the Holidays

As Fall continues and Winter comes, we often see investors get more stressed – not less. Why is that? They’re trying to juggle carving a turkey, wrapping gifts, and their normal life stress – all on top of the market news.

Holidays can be stressful enough by themselves. As income investors, we craft our portfolios to be one in which we can walk away for a break and it will not fall apart without our involvement. So get into the holiday mood if you celebrate, and let the market keep paying you without monitoring it

High Dividend Opportunities will be here when you get back, we’ll be monitoring our portfolio and sending you our regular content and updates. This means you can go enjoy that peppermint mocha with the family and build a snowman – without having to worry your portfolio will vanish overnight.

Do take time to capitalize on opportunities, if you want to, when you take a break from the festivities.

All too often investors get caught up in their portfolios and forget about the life going on all around them, if doing that stresses you out, you might be missing one of the biggest benefits of the Income Method – it can be hands-off!

I love when a member comes back from a multi-week vacation and gets caught up. The simple fact they can do that without worrying about their income speaks volumes to the type of relationship we want to foster with the market. It is a great tool, but an abusive master. So we want to leverage it as a tool to increase our income and achieve our goals; we don’t want it to be our pharaoh.

Conclusion

Take a few moments and get your mind in order as the year comes to a close. If you’re going to tax loss harvest, go do it sooner rather than later, so when you’re done – everyone else will be in the middle of doing it. Set a goal for 2023 or the end of 2022. This means evaluating where you are, where you’ve been, and where you want to end up. That goal will be where you focus in 2023 and help keep you on the right path. Don’t get distracted! Finally enjoy the holidays. This time of year can be one in which lifelong memories are made. Don’t let the market capitalize all your time – that’s what we’re here for! Go enjoy your family and hobbies.