With the S&P 500 index up more than 300 percent and the Nasdaq more than 400 percent since the March 2009 low, one of your bigger investment risks may be complacency.
“It is surprising the number of people who haven’t taken money off the table and rebalanced,” said Anthony LoCascio, a Clinton, New Jersey, certified financial planner with serious tax chops. (He’s also an enrolled agent.)
That’s easy enough to pull off in a 401(k) plan or IRA where there’s no tax hit for rejiggering, but if you’re sitting on fat profits in a taxable account, the specter of having to pay capital gains tax when you sell can be a deterrent to basic portfolio maintenance.
A smart solution is to just give it away.
Donating stock, fund shares — or just about any appreciated asset — wipes out any capital gains tax bill assuming you owned the asset for at least one year. You can also claim the value of the donation as a charitable deduction in the year you make the move.
“If you’re charitably inclined, instead of making cash donations, giving an appreciated asset is always smart, and especially now given market valuations,” LoCascio said.