By: Joseph Goldy, CFP®, CDFA®
As we cross the halfway mark of 2025, the coming months present a crucial window for strategic financial decisions. While many focus on summer plans, forward-thinking investors are laying the groundwork for sustained growth. Here are five key investment areas we consistently address with HIGHLAND clients.
1. The Roth Conversion Sweet Spot
If you're in a moderate tax bracket today but expect to be in a higher one in retirement, market volatility could reduce the value of your Traditional IRA or 401(k), creating a "discount" on Roth conversions.
Consider this: Converting money from a Traditional IRA to a Roth when the market is down 15% (how much the S&P 500 was down in 2025 at one point) means paying taxes on the reduced value while securing all future growth tax-free.
The key is spreading conversions across multiple years to manage your tax bracket. Converting everything at once could push you into a higher tax tier, defeating the purpose.
2. Harvesting Opportunities in Uncertain Markets
Tax-loss harvesting isn't just a year-end strategy—it's a year-round opportunity that most investors miss. With market sectors rotating throughout 2025, chances are you have winners and losers in your portfolio right now.
At HIGHLAND, by strategically selling underperforming investments, we can offset gains from investments that have increased in value while maintaining a person's desired asset allocation. The IRS allows you to deduct up to $3,000 in net losses against ordinary income, carrying any excess to future years.
The secret sauce? Immediately reinvesting in similar (but not identical) assets to avoid the wash sale rule while staying invested. This strategy keeps you positioned for market recovery while reducing your tax burden.
3. Maximizing Your Retirement Contribution Strategy
Most people think about retirement contributions in December, but that's like trying to lose weight on New Year's Eve—technically possible, but not optimal. The magic of compound growth means every month you delay costs you money.
If you're not maxing out your 401(k) ($23,000 for 2025, or $30,500 if you're 50+), calculate what you need to contribute monthly to reach the limit by December. The same applies to IRA contributions—$7,000 annually, or $8,000 with catch-up provisions.
The backdoor Roth conversion remains available for high earners who can't directly contribute to a Roth IRA. This strategy involves contributing to a non-deductible traditional IRA and immediately converting to a Roth, effectively bypassing income limits.
4. The Health Savings Account Triple Play
If you have access to an HSA, you're sitting on one of the most powerful tax-advantaged vehicles available. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free—a triple tax advantage no other account offers.
The 2025 contribution limits are $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution if you're 55 or older. Many of my clients are increasing their HSA contributions now to reduce their current tax liability while building a medical expense war chest for retirement.
Here's the advanced strategy: if you can afford to pay medical expenses out-of-pocket, let your HSA grow untouched. After age 65, you can withdraw funds for any purpose (paying ordinary income tax, like a traditional IRA), making it a stealth retirement account.
5. Portfolio Rebalancing in a Shifting Landscape
The first half of 2025 has reshuffled the investment deck. Technology stocks have had a mixed performance, international markets show signs of life, and fixed income offers yields we haven't seen in years.
At HIGHLAND, this creates an opportunity for us to rebalance your portfolio back to your target allocation. We move those funds into underweight areas by trimming positions that have grown beyond their tolerance band. This disciplined approach forces us to sell high and buy low—the essence of successful investing.
Your Next Steps
The second half of the year is your financial opportunity zone. While these strategies can significantly impact your long-term wealth, they require careful consideration of your unique situation. Your income, tax bracket, retirement timeline, and risk tolerance all influence which moves make sense for you.
Joseph Goldy, CFP®, CDFA ®, is a wealth advisor and CERTIFIED FINANCIAL PLANNER™ at Highland Financial Advisors, LLC, a fee-only fiduciary wealth advisory firm based in Wayne, New Jersey.
Joe specializes in working with newly independent women because of divorce or losing a spouse. He understands firsthand the value of having a clear financial picture pre- and post-divorce and a plan to restate goals as a single person. When he is not helping clients, Joe enjoys spending time with his two sons outdoors and volunteering to help raise money for Type 1 diabetes organizations.
The foregoing content reflects the opinions of Highland Financial Advisors, LLC, and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct.
Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns.
Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful or that markets will act as they have in the past.
The above article was written with the assistance of artificial intelligence (AI).