Don’t Spend Your Tax Return—Invest It
When a tax refund is on the cards, the notion of tax return investment is probably the furthest thing from anyone’s mind. Whether there will be a refund of $500 or $2,500, the temptation is usually to spend it or clear an outstanding bill. Choosing to use this money in a different way could actually determine your future financial position. It’s rather simple. Don’t spend a tax refund. Invest it.
People dream of having a little nest egg set aside for a rainy day, for a future property purchase or even for the essential retirement fund. The key to making dreams come true is to start. It does not matter how much money makes up the first deposit. It’s never too early to plan for the future.
Use a tax refund to accomplish goals
Let’s take a look at how a tax refund can be wisely invested.
1. Invest in an emergency fund
Putting an unexpected sum of money from a tax refund aside for an emergency is definitely a wise move. Everyone should have a shush fund for those moments that can and do crop up every now and then. The money must be easily accessible and also invested wisely so that a $500 deposit does not become $50 because of bank fees and poor investment choices.
Resources such as Taxwise can help with the decision making process however as a rule of thumb, opt for a bank account with a high interest rate that may be an online service only. Be wary of fine print that could lock it away for a period of time though.
2. Invest in long-term plans
Whilst the future can often feel like a lifetime away, establishing an investment plan so that dreams become a reality is worthwhile. Long term plans can be kicked off with a tax refund. It could be money for an education fund or saving up for a car. Get it started today.
3. Invest in property
Investing money in property is a common method, however in this instance, the idea is to invest in an existing property. Channel a tax refund into a mortgage to ultimately save thousands on interest. Make much-needed improvements to a home is also to help improve its value long term.
4. Invest in business
Running a business takes time and money. A cash injection could be exactly what is needed or utilise a tax refund to help turn an idea into a reality.