6 Smart Tax Investment Options for Savvy Savers
Your refund is on the way!As your refund makes its way to your bank account, you start to imagine all the big purchases you'll make this year. You've worked hard all year long and you deserve it, right?Of course, you do!But, before you go and purchase that new TV, consider a smart tax refund investment. Smart tax refund investments are investments that you also deserve. While they may not provide us with instant gratification and joy like a new TV, they do set us up for future success and gain.As your refund is en route, take time to consider your goals, your future, and your priorities.If you're interested in making a smart tax investment this year, then you may just be wondering how exactly to make that a reality.Read on to discover how to make smart tax return investments to multiply your refund.
Smart Tax Investments that Multiply Your Return
Investment opportunities are abundant, but what's the best one for your tax refund? Tax refunds come but once a year, and if you're among the average Americans receiving $1,949 this season, then you'll be coming into a good chunk of change that can multiply over time. Explore the following smart ways to invest your tax refund and get the most out of your return.
1. Start a Business
If you've been itching to start a business or start a franchise in your area, then using your tax check could be your ticket to a whole new life. Starting a business can require a lot of startup costs, so having a lump sum could help you get started.
If you're wary about starting your own business from scratch, then investing your tax refund into a franchise is a smart decision. Franchise companies not only help franchise business owners to provide training materials, but they also take care of marketing.
Before investing in any franchise or business, make sure to conduct market research. Also, assess the financial needs and obligations as well as the potential for profit and success.
2. Real Estate
Investing in real estate is a long-term investment that can help you to see a return. Of course, not all real estate investments are a wise choice, but the right real estate investment can grow your money over time.For example, consider using your tax refund to save up for a down payment on a house. Not only will your money be going to a good cause long-term, but you'll also get the pleasure of owning a home. So, consider saying goodbye to rent and landlords once and for all by securing a home for your future.You could also consider investing in rental properties. Having a rental property will allow you to collect rent on a monthly basis. Great income properties pay for themselves as the rent money collected goes toward paying the mortgage.Once the mortgage is paid off, then you can expect all that rent money to go towards your bank account and making property improvements.If you already own a home, then consider using your tax refund to make additional payments on your mortgage. Make sure to check with your lender first, however, to ensure you won't get penalized for paying it off too soon.
3. Pay Off Debt
Debt plagues most Americans, but the most frustrating form of debt is high-interest debt. As the years or months go on, more and more money is being added on to our initial charges.So, take a good look at all your debts and create a plan to pay off all high-interest debt first. For example, credit cards, personal loans, or payday loans. You can also aim to pay off any smaller debts with your refund check like medical bills or the remainder of your car loan.While paying off debt can be a drag, doing so helps to free up your finances and peace of mind for the future.
4. Emergency Fund
If your emergency fund isn't optimal, then it's a good idea to use your tax refund to save up. An emergency fund is money you save for unexpected expenses or life circumstances. For example, saving in case your car breaks down, for medical bills, or if you lose your job.Experts suggest putting aside three to six months of your expenses into your emergency fund. That includes rent or mortgage payments, groceries, utilities, and any insurance or car payments. At the very least, experts advise saving $1,000 to ensure that an unexpected bill won't strain your bank account and lifestyle.
5. Simplify Your Life
Simplifying your life and promoting work-life balance could be the smartest tax return investment for your refund. Consider simplifying your life by investing in a grocery delivery service, moving closer to work, or purchasing an affordable vehicle.The key to using your tax return to simplify your life is to determine how spending your tax refund on these expenses can save you time and money. So, if you're extremely busy at work and craving more time with your family, then a meal prepping service could be exactly what you need to make your life more manageable.
6. 401(k) Contribution
If you have a 401(k) retirement plan, then investing your tax refund into your account could be the smartest option for you. All money that goes into your 401k is pre-tax dollars. Contributing pre-tax dollars means your income tax will also be lowered.When contributing to your 401(k), make sure to at least contribute the percentage of your income that your employer is matching. If your employer will match 3% of your income then make sure to contribute the full amount.Since contributing more to your 401(k) will lower your paychecks, then you can prepare to compensate with your tax refund check. Next year when you file your taxes, you'll pay less in taxes because your taxable income will be lower because of the money you placed into your 401(k).
Smart Tax Refunds for Savvy Savers
Smart tax refund investments will make you feel more confident and secure about your future. They'll make you feel more responsible and at peace knowing that your hard-earned money isn't going to waste. After all, there's always a "new and improved" gadget to buy, but there's not always money available to improve your well-being for the long-term.Want to invest in a franchise? Contact us today to learn more about franchising options.
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