Investor Bulletin:

Year-End Investment Considerations 

for Individual Investors

The SEC’s Office of Investor Education and Advocacy and 

the Financial Industry Regulatory Authority (FINRA) are 

issuing this Investor Bulletin to provide individual investors 

with a few suggestions for year-end investment planning as 

the year draws to a close.

Review Your Asset Allocation

The end of the year is a reasonable time to review your 

overall investment portfolio and evaluate your existing 

asset allocation. Asset allocation involves dividing an 

investment portfolio among different asset categories, 

for example, stocks, bonds, cash and alternatives like real 

estate or commodities. By including asset categories 

whose investment returns move up and down under 

different market conditions, you might be able to better

protect your overall investment portfolio from significant losses or price swings. Market conditions that cause 

one asset category to do well can cause another asset 

category to have average or poor returns. By investing 

in more than one asset category, you can reduce your 

overall risk.

Consider Rebalancing

After reviewing your asset allocation, you might want 

to consider rebalancing your investment portfolio. 

Rebalancing involves bringing your portfolio back to 

your desired asset allocation mix. Because some of your 

investments will grow faster than others, rebalancing 

allows you to adjust your investment portfolio so as not 

to overemphasize one or more asset categories. Generally, there are three ways to rebalance your investment 

portfolio: (1) sell some of the over-weighted assets in 

your portfolio and use the sales proceeds to purchase 

more of those assets that are under-weighted in your 

portfolio; (2) purchase additional investments in those 

assets that are under-weighted in your portfolio; or 

(3) if you are making continuous contributions to your 

investment portfolio, adjust your allocations so that more 

of your income flows to under-weighted asset categories 

until your portfolio comes back to your desired asset 

allocation mix.

Tax Considerations

As you review your investment portfolio at the end of 

the year, it is natural to consider your investment planning for the year ahead. If you are considering selling 

securities, it may be worthwhile to weigh the potential 

effects of current tax rates on your investments, including 

whether selling your securities will trigger capital gains 

or other taxes. In 2012, in particular, investors may 

be concerned about the so-called “fiscal cliff,” which, if 

not resolved, could result in increased capital gains and 

dividend income tax rates. Potential changes in these tax 

rates could result in year-end selloffs as some investors 

Investor Assistance (800) 732-0330 www.investor.gov

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may seek to take advantage of current capital gains and 

dividend income tax rates. Investors who are interested 

in learning what impact tax rates, including potential 

changes in the tax laws, may have on their investments 

under different financial scenarios should consult their 

tax adviser or visit the IRS website (www.irs.gov) for 

more information. Investors should also contact their 

financial adviser to discuss these issues before making 

any investment decisions.

Check Out Your Investment Professional

If you plan to use an investment professional to help 

you, verify whether the individual is licensed to do business with you, and check out their background—and 

the firm for which they work—using FINRA Broker 

Check or the Investment Adviser Public Disclosure 

(IAPD) website. Many investors do not realize that they 

can check the background of a broker or investment adviser. It’s free and easy—and a key step for avoiding investment fraud.

Locate Your Financial Records

Do you remember where your financial records are 

located? If something were to happen to you, would 

your trusted family members or confidants know where 

to find your financial documents? These documents and 

related items may include stock certificates, savings 

bonds, brokerage statements, tax returns, mortgage 

statements, life insurance policies, individual retirement 

account statements, employer-sponsored retirement 

plan statements, pension documents, annuity contracts, 

housing and land deeds, bank account information, 

and estate planning documents (including health care 

instructions), as well as safe deposit box keys. Are your 

financial records organized in a safe place? Consider preparing a list identifying these records, including a list of 

financial accounts and all user names and passwords, and 

their location.

Related Information

n SEC Publication: Beginners’ Guide to Asset

Allocation, Diversification, and Rebalancing

(available at http://www.sec.gov/investor/pubs/

assetallocation.htm)

n Investor Bulletin: Top Tips for Selecting a Financial Professional (available at http://www.sec.gov/

investor/alerts/ib_top_tips.pdf)

n FINRA’s BrokerCheck (available at www.finra.

org/Investors/ToolsCalculators/BrokerCheck/)

n Investment Adviser Public Disclosure (IAPD)

(available at www.adviserinfo.sec.gov)

The Office of Investor Education and Advocacy has 

provided this information as a service to investors. 

It is neither a legal interpretation nor a statement 

of SEC policy. If you have questions concerning the 

meaning or application of a particular law or rule, 

please consult with an attorney who specializes in 

securities or tax law.

SEC Pub. No. 132 (12/12)

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