The money you receive from your tax refund check is the brighter side of paying taxes. But before you rush to spend it, read our suggestions to make that money bring in more money.
So after a whole year of paying your taxes and frowning about it, the time comes to collect the money from your tax refund. The first thing that comes to mind is all the ways we can spend the money on something we want. But there are some money moves that can be much smarter in the long run.
Here are ways of investing your tax refund this year which you should think about.
1. Invest in assets besides stock market
Iinvesting in stocks and bonds may be the first investment we think of, but is only one area where you can put your money to work in. It is, of course, a smart decision for retirement and your other financial goals, but there are many other options you can look into.
Diversification is important and it is important for your money to have numerous options for growth. So analizing new aletrnatives is a good idea.
Some examples of alternative investments can be real estate (crowdfunding, rental properties, rehabs, etc.), investing in commodities (silver, gold, etc), or investing in arts.
2. Make extra high-interest debt payment
Has a high-interest credit card balance been a worry for some time? Have you been struggling with old bebt such as medical bills, or student loans? Your tax refund money can be used to tackle that debt at last. Start with debts with the highest interest rates, this not only helps cut down your debt a little faster, but can save you on some yearly interest.
If you don't have any credit card debt, use your tax refund to reduce your car or student loan debt.
3 Increase your resale value
If you own your home and have been waiting to replace a leaky pipe or start a much-needed home improvement project, your tax refund might be a good time to make your home more functional while increasing its resale value.
The same thing can apply to your car. If you have been postponing an expensive car repair this money can help you pay for it
These types of investment can be beneficial for your everyday life and family, and can increase the resale value of your home or car as well.
4. Invest in Others
Use your extra money from your tax refund to invest in others, for example by donating it to a cause you believe in. You will be helping others through those charities, but you also get a tax-break on your contribution. This, of course, shouldn’t be the main reason to help others, but it it is an added benefit.
You can also invest in others outside of charities, If you have a well-established financial portfolio and are near retirement age, you may want to consider gifting excess funds, such as a large refund, every year. The IRS sets an annual limit ($15,000 per recipient, as of 2019) on the gifts individuals are able to transfer to others, including family members, without filing a gift tax return.