The average tax refund in 2018 was $2,781! With that amount of money, you could create emergency savings, pay off out-of-hand credit card debt, prepare for your retirement, or even learn how to play the violin!
There are several ways to invest your tax refund, so don’t let this year’s return vanish. Check out these easy ways to invest today!
1. Open a Savings Account
If you don’t have a savings account yet, now may be an excellent time to open one. It’s always wise to have some funds set aside for emergencies. You never know when you may encounter unexpected automobile issues, home appliance failure, or illness.
While it’s not a lot of fun to sit and dwell on terrible things that could happen, putting your annual tax refund into a savings account can help you prepare for any of life’s surprises. Opening a savings account is easy, quick, and painless. Also, your money will be earning a small amount of interest while it accrues.
Overall, investing in a savings account is one of the best choices you could make with your tax refund!
2. Get to Know the Stock Market
You don’t have to be a banking genius to understand the stock market. There are tons of instructive and informational materials that you can explore to help you understand how it works and how to make investments.
But perhaps even better, there are a handful of investing apps that make saving money simple and easy. Some save pennies with every transaction, while others simulate the stock market to help you learn about stocks without the danger of you losing real money. Check them out and see which investing app is right for you!
3. Pay Off Credit Card Debt
Do you have outstanding debts? Your tax refund may be the first step toward financial freedom! You can use your funds to pay off credit card debts, student loan debts, and any other debts you may have.
This route can result in a higher credit score and peace of mind. Rather than going to bed every night with the weight of debt hanging above you, you can relax knowing that you’re debt-free! And with a higher credit score, you can gain access to higher levels of credit borrowing, better auto loan rates, and improved housing for you and your family.
4. Open an IRA Fund
Did you know that your money could help you earn more money? An IRA fund is the real-life equivalent to the adage, “It takes money to make money.” When you deposit your annual tax refund into an IRA fund, it accrues a decent amount of interest. In twenty years, you could more than double your investment!
Many people attend a few years of college before having to drop out due to financial reasons. With a little monetary boost — your tax refund — you could either pay off a portion of your student loan debt or decide to go back to school!
The average annual tuition for in-state community college students in 2020 is $4,816. This number varies from state to state, and whether a student is pursuing part-time or full-time education. Also, tuition for four-year universities is almost always more expensive. Still, your tax refund could help pay for you to continue your higher education, even if it’s only one semester a year.
You could also choose to invest in your child’s future by opening a college fund. Thanks to inflation and the ever-rising cost of college, your child may not be able to afford to go to school without your financial assistance. Even with a scholarship, many students struggle to afford textbooks and supplies to keep up with their peers.
However, a college fund can act as a financial support system when your child comes of age and is ready to tackle higher learning.
6. Give to Charity
Using your tax refund as a charitable donation is an investment in your community and the world around you. Also, you’ll likely be able to write-off that generous donation on your taxes in the upcoming year, which can reduce the amount of taxable income you have.
Overall, giving to a charity helps others, and it helps you! Pick a cause that you genuinely care about, and donate today!
7. Embrace a Passion
Most of us have a hidden hobby or passion, one that fades with time, added responsibilities, and the grind of life. But one of the truly wonderful things about a tax refund is its ability to revive those passions and interests.
If you’ve ever dreamed of learning how to play an instrument, traveling somewhere, treating yourself to a decadent shopping spree, or taking a class in a unique skill, you now have the funds to pursue that dream!
Life is short and fleeting, and one of the best ways that you invest your tax refund is by investing it in yourself. A happier life is a better, healthier life, and your refund could help you become a more cheerful, positive, and capable version of yourself.
Get Investing Today!
There are plenty of amazing things that you could do with your tax refund this year. The best course of action for you depends on your preferences, needs, and life goals. However, it’s wise to sit down for a few minutes and deeply consider your options.
You may find that this year, your life changes dramatically for the better. So, what are you waiting for? Get investing today!