Now that tax time is fully underway, you’re probably either filing or waiting for your refund to come in. While some consider their refund as some extra spending money, others consider it as a fantastic investment tool. While having a little extra spending money is great, a tax refund can go a long way when it comes to making a few wise investment choices. If you’re waiting on a nice sized refund and wondering how you can best invest it, consider some of these options:
Pay Down High-Interest Debt
It’s not uncommon to have a high-interest debt that you may be dealing with. Often times, these can be frustrating to pay down because they interest makes it difficult to see a dent in the balance, even when you’re making larger payments. Instead of making a big purchase, or spending your refund on something you don’t need, consider using your refund to make a payment that will significantly reduce your balance, or even pay it off completely. This elimination will make a huge difference in your finances, as you’ll be able to take those monthly payments and save more or put them towards something else.
If you’re interested in investing, you likely know that making a good investment takes having a nice lump sum of money. You’ve been wanting to invest, but you’ve been waiting to have that extra cushion; luckily your tax refund is on it’s way to your bank account. Do some research about where you’d like to invest, whether it’s in business, stock market, or real estate. Once you’ve figured that out, you know your refund is going to a good place.
Contribute to a Down Payment
Tax refunds are always nice contributions when you’ve been saving for something important, such as a downpayment on a home, or car. If you’re saving for a home, for example, your tax refund is a get contribution to boost that down payment a little and give yourself a better start. The larger your downpayment, the lower your mortgage payments will be.
Build an Emergency Fund
One of the best ways to put your tax refund to good use is technically not using it at all, or until you really need to. Having an emergency fund is always a smart decision that can better prepare you for unexpected life events that may be more costly than you planned. You can use your tax return as a contribution to either starting or building up an emergency fund and have a peace of mind that should you need it, it’s there waiting. Depending on what type of savings account you’re using, it can also collect interest while it sits!