Are you getting a great tax refund this year? Instead of just frittering it away on things you don’t really need, consider making an investment that will pay off throughout the year. Here are just six ways to invest your tax refund so that it will keep on giving back:
1. Start an emergency fund
If you don’t already have an emergency fund of three to six months’ worth of expenses, use your tax refund to get one started. Having an emergency fund can help you avoid going into debt if you lose your job or take a pay cut down the road. Plus, when that kind of stability behind you, you’re more likely to make wise financial choices, rather than simply reacting to difficult financial situations.
2. Pay down credit card debt
According to a CNN.com article, the average American family has about $10,000 of credit card debt. If you’ve got that debt hanging over your head, use your tax refund to pay it down. You can pay down part of your higher interest debt with a credit card, and then transfer your remaining balance to low interest credit cards, which can help you pay down the debt more quickly.
3. Put it in retirement savings
If you’ve already got an emergency fund and low credit card debt, consider putting your money into retirement savings. By investing your tax refund into a tax advantaged retirement account, you can save ev
en more on your taxes for the next year, too.
4. Boost your home’s resale value
If you’re thinking about selling your home any time in the next few years, you can put your tax refund into a project that will improve its resale value. Updating the kitchen or bathroom can help at thousands to your home’s resale value and set it apart from the rest of the homes in your area. Even if you aren’t planning on selling for a while, a home upgrade can improve your quality of life now and your resale value when you’re ready to sell sometime down the road.
5. Buy some stock
You could also literally invest your tax refund by buying stocks or bonds that you’ve been eyeing. If you aren’t an experienced investor, though, you’ll want to talk with an investment advisor to help you decide where best to put your tax refund this year.
6. Take a vacation
A vacation may not seem like much of an investment, but sometimes blowing off a little steam can help you become more productive in the months ahead. Put your tax refund into a vacation if you’re fairly well set financially and if you haven’t have a vacation in a while.
Daniela Baker is a personal finance blogger. Visit her blog at http://www.creditdonkey.com/
- Ten Ways to Use That Tax Refund
- TurboTax – How to Spend, Save, or Stretch Your Tax Refund
- Smart Ways to Use Your Tax Refund
- What to do With Your Tax Refund
- Resist The Temptation To Blow Your Tax Refund On Something Stupid
© 2012, Bruce McFarland. All rights reserved.