Ideas and Opportunities for Your Tax Refund

Ideas-Opportunities-for-Tax-RefundAccording to the Internal Revenue Service (IRS), nearly 80 percent of people who file taxes receive a refund of some amount.

It’s a great feeling to get an influx of cash, but before you go and spend it all in one place, consider this an opportunity to grow your savings or to invest. It may not seem like a fun option in the present moment, but your future self will thank you.

Here are some ideas:

Pay Down Debt

If you’re carrying a credit card balance, now is a great time to pay it down, or better yet, pay it off. High-interest debt is one of the biggest threats to building and maintaining wealth. Other ideas would be to pay down your mortgage and student loans if possible. Paying off a large piece of debt can help you free cash to….

Invest. Invest. Invest.

This is a great opportunity to build and manage your personal capital by making your tax refund work for you. Get with your wealth management advisor and map out a plan to invest a significant chunk of your refund in traditional IRAs and 401k’s, or in alternative investments such as real estate, private equities, hedge funds and high-yield bonds. These alternative asset classes can help further diversify your portfolio and help protect you from big losses should the traditional stock and bond markets turn sour.

Save for Your Child’s Education

Also consider using your tax refund to fund your child’s education with vehicles like the 529 College Savings Plan. “529s” are available as either a prepaid tuition plan or a college savings plan, and they are offered through each state or via independent financial institutions. Under the plan, you can contribute up to $14,000 per year per child and still remain below federal gift tax requirements. The funds in these plans grow tax-deferred, and you can receive tax-free withdrawals for qualified educational expenses.

Ensure You Are Insured

Your tax refund can also be used to further protect yourself, your family and your property by either paying off current insurance premiums, purchasing additional insurance if needed, or building your universal life insurance policy.

Have Questions?

Did you receive a big tax refund, and want to learn how to use it wisely to build your wealth? Just click here to submit your questions, and we’ll follow up with helpful answers. No strings attached.