4 Investments You Can Start with Your Tax Return
A tax return is one of the largest windfalls most families see each year. While most people know that it’s better to save and invest a tax return than simply spend it, many are unsure of how they should be investing the money.
Here are four of the best investments you can start with your tax return this year.
Dividend-paying Stocks
With the money you get back from your tax return, you will likely be able to buy several shares of stock in good, solid companies.
If you really want to maximize the benefits of this investment, consider investing in stocks with dividend reinvestment programs.
These stocks pay dividends quarterly or annually, then use those dividends to buy additional shares for the investor.
Through this mechanism, your tax return can turn into a long-term investment that is constantly feeding back into itself.
Precious Metals
Valuable metals like gold and silver have historically been used by investors as hedges against both inflation and economic uncertainty.
As a result, it is often a good idea to include at least some precious metals in your investment portfolio.
Be sure to check out a gold price forecast before buying, as this can help you decide how much of your portfolio should be made up of precious metal investments.
Real Estate
If you have an especially large tax return, you might consider using it to finance part of the down payment on a home.
Buying your own house is one of the best financial moves you can make, as it allows you to build equity in your own property rather than paying rent to a landlord.
If your credit and budget allow for it, using your tax return for a down payment is a great way to invest the money.
Paying Down Debts
While it isn’t an investment in the traditional sense, paying down debts with your tax returns can be a very beneficial financial decision.
By paying off existing debts ahead of schedule, you can save yourself money on interest down the road.
Start by paying off the debt with the highest interest rate, as this will make the biggest difference to your long-term financial situation.
By making one or more of these four investments with your tax return, you can increase your chances of achieving financial stability and independence in the long run.
Needless to say, the amount you’ll be able to put into these investments will depend on the size of your tax refund.
Even if it’s only a small amount, though, investing it will be a much better decision than spending it.
Category: Taxes
