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Hey savvy investors, welcome to a special post by your friendly dividend uncle! As the year winds down, it’s the perfect time to reflect, reset, and get ready for an exciting 2025. This year may have had its challenges, but it also brought us lessons about resilience, patience, and the value of staying diversified.

Today, I’m sharing seven things I make sure to do before the year ends: habits that help me optimize my investments, reduce my taxes, and set clear goals for the year ahead. These aren’t just generic tips; they’re strategies I personally follow. They’re easy to implement and adaptable to your own financial goals.

Before we start, I must let you know that the financial strategies discussed in this post reflect my personal practices and are shared for educational purposes only. These are not recommendations, and your financial circumstances may differ. Please consult a licensed financial adviser to determine what’s suitable for your needs.

Okay, let’s dive in, and hopefully, these ideas will inspire you as we close the books on 2024 and look ahead to a prosperous 2025!

1. Max Out My SRS Contributions

Let’s start with the Supplementary Retirement Scheme or SRS. This week, I topped up the maximum $15,300 to my SRS account, ensuring I qualify for the maximum tax relief this year. Just to provide an example, I mainly use my SRS account to invest in Endowus’ globally diversified funds. Why? Because it gives me exposure to different asset classes around the world, balancing risk and potential returns. And the best part? The tax relief from S.R.S. means I’m saving while investing, it’s like a double win!

2. CPF Top-Ups for My Wife

This one’s close to my heart. At the start of the year, I topped up my wife’s CPF Special Account to maximize the benefits of that 4% annual interest early. Since she isn’t working, this also qualifies me for tax relief, by up to $8,000 of top-up. It’s a simple way to grow her retirement savings while cutting taxable income: a win-win!

Remember that from 2025, the annual income of your spouse cannot be more than $8,000 for the previous year. For 2024, the criteria remain at $4,000 for the previous year.

3. Put Year-End Bonuses to Work

The year-end bonus is always a welcome boost, and it is crucial not to let the rest of the bonus sit idle.

For me, it plays an important role in rebuilding my dry powder cash reserves this year. As I will discuss later I’ve used up a significant portion of my cash reserves to take advantage of opportunities this year. Hence, it’s a good time for me to rebuild those reserves.

However, while rebuilding cash reserves is important, I plan to invest the remainder progressively to keep my money working hard for me. Whether through dollar-cost averaging into diversified funds or selectively entering opportunities as they arise, the key is to maintain a disciplined approach and strike a balance between readiness for future opportunities and maximizing current returns.

4. Reassess Cash Holdings

Another important year-end task for me is to reassess my cash holdings, both for my emergency fund and my “dry powder” cash reserve for investments. The emergency fund is crucial, covering at least six months of essential expenses. I keep it untouched in a high-interest savings account or money market fund, ready for emergencies.

But just as critical for me is maintaining my dry powder cash reserve for investment opportunities, which has kind of run dry. I deployed a chunk into REITs, which seemed to be showing upturns earlier in the year, and into U.S. Tech stocks, which have had a strong rally. While these were deliberate moves aligned with my strategy, they’ve left my cash reserves lower than I’d like, especially now when the market valuations are quite high. For example, if we look at the Shiller’s PE ratio, U.S. stocks are hovering near historical highs.

With this in mind, I’m planning to deliberately rebuild my dry powder in the coming year. This will allow me to be ready for future buying opportunities, especially if market corrections occur or valuations become more attractive. This decision will also influence my monthly dollar cost averaging or DCA plans for 2025. I may need to adjust the balance between regular DCA investments and replenishing my cash reserves, which is something I’ll carefully plan before the year ends.

5. Review My Portfolio Performance

At the end of every year, I make sure to review my portfolio’s performance in detail. This involves comparing my returns for the year against relevant benchmarks, such as the Straits Times Index, CSOP iEdge S-REIT Leaders index for REITs and dividend stocks, or the S&P 500 for my U.S. equity exposures. The goal is to assess whether my portfolio met its target returns and, if not, figure out why. Was it market conditions, my choice of investments, or perhaps an opportunity I missed?

That said, while I monitor my portfolio quarterly out of curiosity, I save my full analysis for year-end to avoid being influenced by short-term market noise. This gives me a clearer view of long-term performance. Of course, it’s also important to remember that one year may not be sufficient time for an investment thesis to fully play out, especially for long-term strategies.

As part of my usual practice, I’ll be sharing the details of my portfolio performance in an upcoming post. So, do look forward to it! It’s always an insightful exercise for me, and I hope it will be for you too.

6. Take Stock of My Portfolio

If you’ve seen my post from the start of the year, you’ll know that my portfolio is roughly balanced: 25% in REITs, 25% in dividend stocks, 25% in growth stocks, and 25% in fixed income. I’m relatively happy with the diversified allocation at the start of the year.

But portfolios don’t stay static. Market values change, and so do allocations as I regularly practice dollar-cost averaging or take advantage of market opportunities throughout the year. That’s why I make it a point to review the current market value of my holdings at the end of the year and assess if I need to rebalance or diversify further.

7. Setting Goals and Plans for 2025

And finally, I’m considering my investment plans for 2025. While I haven’t finalized everything, I’ll definitely share more details as I go along, so stay tuned!

For now, let me share some broad goals that I always keep in mind. One is my passive income target, which I review each year to ensure I’m working toward a specific dollar amount that can cover a substantial portion of my living expenses. Another is my overall asset size, which I aim to grow steadily year by year to achieve long-term financial security.

But 2024 has been a challenging year for dividend and fixed income investors, due to the persistently high interest rates. Meanwhile, U.S. Tech stocks have been on a tear, reaching historical highs this year, but their elevated valuations make them riskier going forward, especially with uncertainty around the U.S. Federal Reserve’s future moves.

With these mixed signals, I’ll be revisiting my strategies carefully before locking in my 2025 plans. For example, I’ve allocated some funds to hedge funds that aim for absolute returns, which can provide stability during volatile periods. I’ve also invested in more stable funds like JEPI, which balances income generation with lower volatility.

The goal, as always, will be to balance income generation with long-term growth while adapting to evolving market conditions. For now, I’m keeping an open mind and focusing on building a resilient portfolio that can weather both opportunities and challenges ahead.

As we wrap up 2024, it’s a great time to reflect on what we’ve achieved and to set ourselves up for an even better 2025. Personally, I’m optimistic about the year ahead. Sure, there were challenges: REITs disappointed us twice, and the U.S. Tech rally left many of us chasing historical highs. But these experiences also taught us valuable lessons about resilience, strategy, and the importance of keeping our portfolios diversified and ready for opportunities.

What’s your game plan for the new year? Let me know in the comments below. And if you found this post helpful, don’t forget to give it a like and subscribe for more insights. Here’s to a prosperous and rewarding 2025.