The Year-End Portfolio Review: 8 Numbers to Check Before December 31

Teresa and Mike Novak of Minneapolis sat down with their October statements spread across the kitchen table: two 401(k) plans, a rollover IRA, a joint brokerage account, and a savings account. Together the investments were worth about $620,000 in this example, up nicely for the year. Teresa, 58, asked the obvious question: "Are we okay?" Mike, 60, admitted he had no idea, because no single statement showed the whole picture.

That is the point of a year-end portfolio review. It is not a forecast and not a trading session. It is a short list of numbers that tell you whether your investments still match your plan, and several of them come with real December 31 deadlines. Here are the eight worth calculating, in the order that makes the work easiest. The figures in the examples are illustrations, and none of this is individual investment advice.

Number 1: your actual stock-to-bond split

Add up every account and sort the holdings into stocks, bonds, and cash. Target-date and balanced funds hold a mix, and their fact sheets show the split. Then compare the result with the allocation you chose on purpose.

In the Novaks' example, they planned on 60 percent stocks and 40 percent bonds. After a strong stretch for stocks, the real split came to 68 percent and 32 percent. The SEC's Investor.gov explains that investments grow at different speeds over time, which can push a portfolio out of line with your goals and change its risk level. Rebalancing brings it back. Investor.gov notes that some people rebalance at regular intervals, such as every six or 12 months, while others act when an asset class moves more than a preset percentage.

If you rebalance, look first inside tax-advantaged accounts like 401(k)s and IRAs, where selling does not create a taxable gain. Redirecting new contributions toward the underweight asset is another way to move closer to target without selling at all. In the example, moving from 68 percent to 60 percent stocks on a $620,000 portfolio means shifting about $49,600, which can be done in one exchange inside a 401(k) or spread over several months of new contributions.

Number 2: the size of your largest single holding

Next, find the biggest individual position as a share of the whole portfolio. This is often employer stock from a 401(k), restricted stock units, or an ESPP, or a single company that has grown much faster than everything else.

FINRA describes concentration risk as the risk of amplified losses from having a large portion of your holdings in a particular investment, asset class, or market segment relative to your overall portfolio. It notes that concentration can happen on purpose or simply because one holding outperformed the rest. There is no official threshold for "too much." The useful exercise is a stress test. If Mike's former employer's stock is worth $90,000 in this example, about 15 percent of the portfolio, a 50 percent drop would erase $45,000. Decide whether you could live with that, and if not, plan a gradual way to reduce it, taking taxes into account.

Number 3: what you pay each year in fund expenses

Investor.gov defines a fund's expense ratio as the percentage of average net assets used each year to pay operating expenses, and it is listed in the fee table of the prospectus. Fund fees are taken out quietly, so they never show up as a line on your statement.

Multiply each fund's balance by its expense ratio and add the results. In an example portfolio of $400,000 held in funds with an average expense ratio of 0.50 percent, the yearly cost is about $2,000. At 0.10 percent, it would be about $400. Add any advisory fee charged as a percentage of assets. Small percentages compound into large dollar amounts over decades, so this number is worth knowing even if you change nothing this year.

Inside a 401(k), your choices are limited to the plan menu, but most menus include at least one low-cost index fund for each major asset class. In a taxable account, be careful about switching funds just to lower costs, since selling a fund with a large gain can cost more in taxes than you would save in fees for several years.

Number 4: your gains and losses for 2026 so far

The next two numbers belong only to taxable accounts, such as a joint brokerage account. Ask your brokerage for a realized gain and loss report for the year, then look at the unrealized gain or loss on each holding you still own.

Realized losses can offset realized gains. According to the IRS, if your capital losses exceed your capital gains, you can deduct up to $3,000 of the excess against other income, or $1,500 if married filing separately, and carry any remaining loss forward to future years. Selling an investment with a loss to capture that benefit is often called tax-loss harvesting, and the trade generally needs to happen by the last trading day of 2026 for the loss to count on this year's return. Holding period matters too. The IRS treats gains and losses on assets held more than one year as long-term and those held one year or less as short-term, and long-term gains can qualify for lower rates. Short-term losses first offset short-term gains, which are taxed at ordinary income rates.

The wash sale rule is the trap. IRS Publication 550 says you cannot deduct a loss if, within 30 days before or after the sale, you buy substantially identical stock or securities, acquire a contract or option to buy them, or acquire substantially identical stock for your IRA or Roth IRA. A purchase by your spouse can also trigger it. Automatic dividend reinvestment in the same fund can create a small wash sale too, so check those settings before you sell.

Also watch for year-end capital gain distributions from mutual funds held in taxable accounts. Some fund companies post estimates of these distributions ahead of time on their websites. If you are about to buy a fund in a taxable account, a distribution right after you buy can create a tax bill on gains you did not participate in.

Number 5: contribution room left before December 31

Workplace plan contributions for 2026 must come out of 2026 paychecks, so this is the most time-sensitive number on the list. Look at your year-to-date 401(k) or 403(b) deferrals on your latest pay stub and compare them with the IRS limits for 2026: $24,500 in elective deferrals, an $8,000 catch-up for age 50 and older, or a higher $11,250 catch-up for people who turn 60, 61, 62, or 63 this year.

Mike, at 60, qualifies for the higher catch-up. If his deferrals total $26,000 so far, he has $9,750 of room left, and only a few paychecks remain to use it. He would need to ask payroll quickly whether a larger election can take effect before the final check of the year.

IRAs and HSAs have more breathing room, since contributions for 2026 can be made up to the tax return due date in April 2027. The 2026 IRA limit is $7,500, or $8,600 at age 50 and older.

Number 6: any required minimum distribution still due

If you are old enough, this number can be the most expensive one to miss. The IRS says you generally must start taking required minimum distributions from traditional IRAs and workplace plans when you reach age 73. Your first RMD can be delayed until April 1 of the year after you turn 73, but each later one is due by December 31. Waiting until April for the first one means taking two distributions in the same tax year.

The RMD for a year is generally the account balance at the end of the previous year divided by a distribution period from the IRS Uniform Lifetime Table. Missing all or part of it may trigger a 25 percent excise tax on the shortfall, reduced to 10 percent if corrected within two years. Roth IRAs have no RMDs for the original owner. Some workplace plans let you delay RMDs while you are still working for that employer, if the plan allows it.

If you are 70 and a half or older and give to charity, the IRS also allows a qualified charitable distribution, a transfer made directly from an IRA trustee to an eligible charity that is excluded from income. For IRA owners 73 and older, a QCD counts toward the year's RMD. It has to go directly from the IRA to the charity, so start the request well before December 31.

Even if you are years away, check this number for an aging parent whose finances you help with, or for an inherited IRA, which has its own distribution rules.

Number 7: how many accounts have current beneficiaries

Count every account that can carry a beneficiary designation: 401(k)s, IRAs, HSAs, life insurance, and transfer-on-death or payable-on-death registrations on brokerage and bank accounts. Then count how many of those designations you have actually checked in the past year.

A beneficiary form on a retirement account or insurance policy usually controls who receives that asset, even if a will says something different. Marriages, divorces, births, and deaths all make old forms risky. In the Novaks' example, Mike's rollover IRA still named his sister as the primary beneficiary, a choice he made before he and Teresa married and had forgotten about until they looked. Fixing it took a ten-minute online form. Name a contingent beneficiary as well as a primary one, and if the forms and your will seem to conflict, ask an estate attorney how your state handles it.

Number 8: months of cash outside the market

The last number protects the other seven. Divide your cash reserves, held in savings, money market deposit accounts, or similar insured deposits, by your essential monthly expenses. The result is how many months you could go without selling investments if income stopped or a large bill arrived.

That matters most for people within a few years of retirement, like the Novaks, because being forced to sell stocks after a decline locks in losses. Make sure the cash is at an FDIC-insured bank or NCUA-insured credit union, and keep balances within the $250,000 insurance limit per depositor, per ownership category, at each institution. A brokerage cash sweep may hold money at partner banks, so confirm where it sits.

Put the eight numbers on one page

Write each result on a single sheet with the date: allocation versus target, largest position, total yearly fees, realized and unrealized gains, remaining contribution room, any RMD due, beneficiary check count, and months of cash. Flag anything with a December 31 deadline, which usually means numbers 4, 5, and 6, and handle those first.

Next year, the same page becomes your comparison point. For the Novaks, the work took one evening, ended with a rebalance inside Mike's 401(k), a payroll change for his catch-up, and a corrected IRA beneficiary form, and they finally had an answer to Teresa's question.