10 Foolish Money Savers
Year-End Planning
December 3, 1997

1. Think before you buy a mutual fund in December. Most equity mutual funds distribute income and capital gains on the last day of the year. If you buy the fund in December, you may have to pay taxes on the end of the year distribution even though you've only held the shares for a little while. Call any funds that you're interested in before making an investment late in the year to avoid any such surprise in a taxable account.

2. Wait until January to pay tuition bills. New tax deductions for tuition kick in on payments after January 1. If you can wait until after the first of the year to pay for your little pumpkin's school, you might be in for a nice deduction. Check with your tax professional to see if you qualify.

3. Double check your insurance coverage. Liability tends to increase with age. Why's that? Because in general we're worth more and have more to lose if something happens. Particularly with the health of the stock market in the last few years you might have much more to lose if you've been lucky. Make sure that your liability insurance will take care of you in case you need it.

4. Visit your tax attorney. There have been a tremendous number of changes in the tax laws this year. If you're not sure what's taken place be sure to check out the Motley Fool Tax area for a primer and see your tax professional to see how these changes might now impact you. Two of the big differences for investors have been the changes in the capital gains tax and the AMT rules.

5. Evaluate your health insurance. If you work for the government or a large corporation that offers many different health care options you're probably being bombarded with information on changing plans this time of year. While it's possible to get as many as 200 (really!) pamphlets on different plans, the one you really need to look at is the program that you're currently enrolled in. Look for any changes that you might not be able to live with.

6. Up your retirement savings allocation. Take this opportunity to increase your contributions to any retirement plans you can participate in. Three out of five baby boomers aren't saving enough for their retirement, and one in five people aged 35-50 hasn't saved a penny. Be Foolish and make sure you're not one of these guys.

7. Don't charge anything over Christmas. Resolve to have a less stressful January by not charging anything in December. Don't cut up your cards (you might need it in an emergency), but put them out of reach just for one month. You might surprise yourself and be able to do it longer. Get into the habit of not borrowing and you'll find yourself saving in no time.

8. Assess your portfolio. Take stock of your stocks. It's not Foolish to keep on top of your portfolio every day. We're investors, not traders, remember. But at least once a year it's a good idea to see where your investments are and if they are continuing to meet your objectives.

9. Invest in yourself. Take a class, read a book, go to a museum. It's so easy at this time of year to get sucked into the "gimme" mood of the shopping mall that we sometimes forget that there are other ways to enrich ourselves. Do something that will make you a happier and better skilled person. You might be surprised to find that it's reflected in your next pay increase!

10. Give something back. This is also the best time of year to be thankful for the many blessing that we've received. Marion Wright Edelman (founder of Children Defense Fund) says, "Service is the rent we pay for living. It's an integral part of our lives, not something we do when we have nothing better to do." Show how bountiful you feel by giving to someone in need. If you're stuck on who to give to, check out this year's Foolish Charity Fund, Share Our Strength. --TMF Hoyden

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