As 30 June approaches, most people think about tax returns and last-minute deductions.

But for long-term investors - and especially those of us pursuing Financial Independence – EOFY is a great opportunity to fine-tune our strategy, see where we can optimise tax, and set ourselves up for a great second-half of the year.

Take some time to reflect and take stock on how things are going, so you can make the most of the next six months. Whether you're just starting out, building your portfolio, or living off it, there are things you need to nail down to ensure you’re totally on top of your investments.

Here’s what’s worth thinking about.

Investments

Have you sold any shares this year? If so, you might have triggered capital gains tax (CGT).

And if you’re planning to make changes to your portfolio before 30 June, it pays to estimate the tax impact before pulling the trigger. Because you might be able to do the following:

• Offset some gains with losses from another investment
• Hold off until after 30 June to push the sale into the next financial year and delay tax
• Bring forward a sale if you happen to be in a lower tax bracket this year.

By the way, if you’ve sold a few shares and have capital losses bigger than your gains, you can carry those losses forward to offset against future gains.

For those with larger portfolios: Due to natural ups and downs in the market, your portfolio might have drifted away from your ideal mix. If the tax consequences are low or minimal, rebalancing could be worthwhile. That said, a better move is usually to rebalance using savings or dividends to avoid the need to sell.

In terms of tracking gains and figuring out your potential tax liability, you have a few options:

• Do it yourself with a spreadsheet, tracking each purchase and sale
• Pay an accountant to help you figure out your CGT bill and keep track of things
• Use a portfolio tracker like Sharesight or Navexa (CGT reports are only available on paid subscriptions)
  

As a lazy person who likes the convenience of having everything laid out simply in front of me, I vastly prefer the third option!

Dividends

EOFY can also be a great time to check how your portfolio is tracking in terms of income. Not just for tax purposes, but to compare it to previous years.

As I write this, the June distributions for ETFs have not yet been announced. So you'll need to wait until late June before you tally up your dividends.

Once you have, check what you were paid this year versus last financial year. Is it higher or lower?

Usually if you’ve been buying, this number will go up every single year. Because of that, dividends are something I love tracking – it’s simple and motivating, and they can show the progress of regular investing, while also providing positive reinforcement.

I usually include a ‘Portfolio Income’ chart in my portfolio updates. Which reminds me, I’m due for another one of those so I’ll get onto that soon! My last one is here.

If you’re a new investor, you can get this info from your dividend statements, your broker, or use a portfolio tracker like Sharesight or Navexa which add it up automatically. And don’t forget to include franking credits – they represent real cash with your name on it.

Franking credits on Aussie dividends can mean the tax on your dividend income is often lower than expected. Not only that, if you’re living off your portfolio and your taxable income is low, you may even get a franking credit refund from the ATO. That’s effectively an income boost and it’s one of the reasons Aussie dividends can be somewhat addictive for retirement or semi-retirement.

For the newbies: any money you reinvested via DRP (dividend reinvestment plans) still counts as income. Even if you didn’t receive the cash, the dividend value is taxable.

Revisit your strategy

Now is a perfect time to zoom out and reflect on your overall investment strategy.

Are you happy with the portfolio and your plans? Is there anything you want to tweak?

For some of you who’ve been on the journey for a while, this might seem like a silly question. But I find people are often weighing up quite a few things, such as:

• Cash vs investments. Should you keep building your shares, or would parking extra cash in your offset or high interest savings account give you better peace of mind? If the recent market wobbles made you nervous, that could be a sign to hold a bit more cash. Also, do you expect to need any large amounts of cash in the next few years – home deposit, car purchase, etc?
• Paying down debt. At current interest rates, do you now find paying off the mortgage more appealing (if you have one)? Or are you happy to keep ‘chipping away’ as you accumulate more shares instead?
• Portfolio simplicity. Is your portfolio looking a little messy? Are there holdings you’ve had for a few years but don’t really care about anymore? Maybe it’s worth tidying these up, paying a little bit of tax, and making your portfolio cleaner and easier to manage.
• Adding another holding. On the flipside, is there something missing that you’ve been meaning to add to your portfolio? Maybe for better diversification, or to better align with how you want to invest going forward?
• Using leverage. Are you thinking about adding a little bit of debt to your investing to try and speed things up? If so, now’s a good time to really think through the risks and rewards. We spoke about the various options in Episode 36 & 38 of the Aussie FIRE Podcast.
  

I believe any changes should be made slowly and carefully – not just because EOFY feels like a time to take action. As the great quote goes: “Don’t just do something, sit there.”

With investing, I believe staying the course is often the best move you can make. Taking time to reflect on your approach helps you stay clear on what you’re doing and why.

Tax deductions

Perhaps the most common focus people have this time of year is scrambling to find tax deductions.

For long-term investors, these could be:

• Interest on loans
• Account fees
• Attending meetings or presentations about your current investments
• Investment subscriptions or paid advice to manage your assets
• Internet usage and computer/phone depreciation
  

Basically, most things related to managing your investments, and costs incurred in the process of earning dividend income.

But we can also think more broadly and see if it’s possible to get tax deductions earlier. If you were going to incur particular costs soon anyway, I would consider bringing these forward to the current financial year where it makes sense. For example, charitable donations, investment property maintenance, educational materials, investment subscriptions, equipment for a business, etc.

Now yes, you’re paying for it sooner, but you’re getting the tax break much sooner too. Rather than paying for it in July or August and then waiting a whole year to claim it – you get the rebate almost immediately. Again, only do this for money you need to spend and are going to spend anyway! And if you’re unsure, speak with a financial adviser.

But perhaps one of the biggest tax deductions is related to Super.

Super

Even if you plan to retire well before 60, building super can still make sense in many cases. Depending on your strategy, making extra super contributions could be an excellent option to save tax and build wealth at the same time.

I find there are three types of people who read my writing:

1) General long-term wealth builders with no plans to retire early
2) People seeking FI and wanting to retire early, but using a two-phased approach of investing inside/outside super
3) Younger people wanting to create freedom as quickly as possible

In my opinion, super works best for the first two groups. Group 3 (which was me back in the day) aren’t going to be enthusiastic about locking up money for another 30+ years, with a bunch of ever-changing rules. Their cash will typically create freedom faster outside super, despite being less tax efficient.

EOFY is your last chance to maximise contributions to your super for the financial year . The current cap for concessional contributions is $30,000 per year. If your employer paid $10,000 during the year, you could add another $20,000 and claim a deduction. So if your tax bracket is 30%, you’ll end up with $17,000 in super, rather than $14,000 in your pocket, leaving you $3,000 better off.

You may also be able to use ‘carry-forward’ rules to contribute more by using any unused cap amounts from the last five years. If you’ve made some capital gains this year, adding to super could help avoid pushing you into a higher tax bracket. I’ll be looking to do this in FY 2025-26 with an upcoming property sale.

To claim a tax deduction for super contributions, you just need to deposit the money before 30 June and submit a ‘Notice of Intent’ form to your fund. Make sure you do it early so it gets processed in time.

Income, expenses and life

Now, this isn’t strictly a tax thing, but EOFY is a great time to step back and review the bigger picture.

How’s your personal income and savings stacking up so far this year? Are things running smoothly, or are there improvements you could make?

Maybe it’s time to shop around and find a better employer. At the very least, you’ll then know that you’re being well compensated for what you do. Maybe it’s worth doing a few more hours or taking on more responsibility so you can build your portfolio faster.

But let’s not forget where the magic happens – on the expenses side. When did you last look over your spending? If it’s been a while, there’s a chance you’re being shafted on your insurance, mortgage, or power bills?

Do some research and find out. Maybe it’s worth delaying that holiday, cooking more at home, or taking a break from drinking for a while, so you can redirect that money towards paying down debt, stacking cash, or growing your shares.

But there’s more to all this than numbers. Ask yourself the following:

How’s life actually going? Are you happy with how you currently spend your time? Does your original goal still make sense? Are you making real progress towards the life you want? Or have you started to drift a little off course?

If you have, find just one thing to focus on to improve the direction of your life – whether it’s your goals, health, relationships, anything. A moment of thought and one action is all it takes to get the ball rolling and feel that sense of progress and momentum again.

Final thoughts

EOFY is often seen as a boring administrative task (and let’s be honest, it is). But it can also be a powerful time of year for long-term investors and those pursuing Financial Independence.

It can turn into a time of reflection, optimisation, and fuel additional progress on your path to FI. Whether that’s through paying less tax, tidying up your portfolio, tweaking your strategy, or doubling down on what matters.

Making this process something you do at the end of each financial year may just be one of the most useful and profitable habits you ever build.

Until next time, happy long-term investing!

Dave

Dave’s best-selling book Strong Money Australia is available on Amazon. Listen to the audiobook on Spotify or Audible.