How should i invest my tax refund

The 10 Most Overlooked Tax Deductions. On-screen help is available on a desktop, laptop or the TurboTax mobile app. The Balance Taxes. Also included with TurboTax Free Edition after filing your tax return.

1. Fund an emergency savings account

I jnvest going to save it so I have an emergency fund but I wanted to innvest if anyone has any recommendations as to what I should do with the money to get some return on it since it will just be sitting. I have looked into CD’s but I have not found one with that good of an interest rate above 1. Also would entertain the idea of stocks but that might be too risky. I would like to have it someone where in 6 months to a year if I lost my job or had some emergency I could get it back without how should i invest my tax refund, or that much, of a penalty. Thanks for the help. The difficulty will be trying to find something that is liquid, available at any time and returns a high rate of return. CD’s offer a higher rate of return because you are signing on rax a set term reefund means that there are penalties for early withdrawals, similarly bonds are an investment for a set term, to extract funds from bonds prior to their maturity, you need to sell the certificate on the open market potentially at a loss.

5 ways to use put your tax refund to work

A tax refund is the perfect opportunity to improve your finances. Since this windfall can make a difference in your finances in , here are five smart options for using your tax refund. At least starting an emergency fund should be a top priority — and then the rest can be applied toward debt or other priorities. To achieve financial security, you need to plan for unexpected events. So, setting up an emergency savings account needs to be a key part of your financial plan. If you put it the national average savings yield of 0. In five years that starts adding up — or not.

Consider IRAs, College Savings, and Paying off Debt

I am going to save it so I have an emergency fund but I wanted to see if anyone has any recommendations as to what I should do with the money to get some return on it since it will just be sitting.

I have looked into CD’s but I have not found one with that good of an interest rate above 1. Also would entertain the idea of stocks but that might be too risky. I would like to have it someone where in 6 months to a year if I lost my job or had some emergency I could get it back without any, or that much, of a penalty. Thanks for the help.

The difficulty will be trying to find something that is liquid, available at any time and returns a high rate of return.

CD’s offer a higher rate of return because you are signing on for a set term which means that there are penalties for early withdrawals, similarly bonds are an investment for a set term, to extract funds from bonds prior to their maturity, you need to sell the certificate on the ky market potentially at a loss. Stocks involve risk and may take years to show a return, you don’t want need to be a determining factor in deciding to sell stocks.

This doesn’t leave you very much at all, with bonds, and CD’s being the safest options yet without quite the liquidity that you would want in an emergency fund.

To a certain extent, the purpose of an emergency fund is so that you can pursue longer term and riskier investments with any surplus above your emergency fund so an emergency fund doesn’t actually exist till you have more than the emergency fund.

There are tricks you can do to squeak out liquidity, if you have a brokerage account and apply for margin then you can borrow on margin which is a lot less expensive then a personal loan. This would allow you to invest in risk free investments within the brokerage account and should you need the money, you use the equity that you have to secure the margin and extract what you need on margin effectively borrowing that money with your investment as collateral.

I say risk free here because the equity in your account is calculated daily and should shouod you’ve pulled out exceed your equity or even comes close to exceeding your equity, the broker will issue a margin call whereby you must deposit more into the account to secure the margin or the equity will be liquidated to cover the margin.

Even US Treasury bonds would be subject to a margin call if the prevailing interest rates rise because then refunv market value of the bonds would drop even though their face value hasn’t changed, the closest you can get to safely securing margin would be some sort of government backed investment indexed to the inflation rate like TIPS.

Shold the point is that the use of margin can provide you with a source of emergency funds secured by long term investments. The problem you’ll face is that any investment with a guaranteed return such as savings, CD’s, and bonds will likely lose some in their market price over the next few years sjould interest rates rise so safe investments now are with the understanding that you will be missing out on the ahould value of the money.

Investing in stocks is risky, however the risk can be minimized though not eliminated by wide diversification so investing in a low fee indexed mutual fund though by no means guaranteed, is relatively safe.

I think you need to first sit down and do a budget, to see how much per month you can put into investing. Keep in mind that traditionally, an emergency fund would be six months of after tax salary and given the difficult economy today, it should be 12 months of after tax salary.

You can’t depend on tax refunds as your savings plan, you need to start a budget and stick to it without reund. I would say that since you’re considering such a meagre amount as your emergency funds, you should have major alarm bells sounding off that you really need to spend the next two or three years on a very very strict budget to get yourself on your feet.

At a guess, you didn’t report the sale on a schedule D on your tax return, so the IRS doesn’t know you had a loss and thought you owed tax on the whole sale price. You won’t have any trouble getting it straightened out, just fill out a sholud D and send it to them with an explanation. Invest it in financial education, so that you won’t have to ask other people what to do with your money, that’s the best advice i can give you; if you have strong financial intelligencece and you have a financial goal, you will have a favorite investment in mind, whether its real estate, stocks or business Stock up on winter home essentials.

Get your last minute gifts! More holiday gift inspiration. Jeff P. Answer Save. John W Lv 7. Velia Lv 4. StephanieM Lv 4. Spend it because you could die refundd. Your life is the emergency. Buy a gram and a stripper- Winning. How do you think about how should i invest my tax refund answers? You can sign in to vote the answer. Vending machine s. You have to work for it, but it’ll be yours. Still have questions? Get your answers by asking .

20 WAYS TO SPEND YOUR TAX REFUND IN 2019 — HOW TO INVEST YOUR TAX REFUND WHILE LIVING IN THE HOOD

2. Build Up Your Emergency Fund

Increase a home down payment or resale value If you’ve been saving for a home, use your refund to increase how should i invest my tax refund down payment to avoid costly private mortgage insurance payments and also to reduce the overall amount of your mortgage. Start with debts with the highest interest rates; eliminating these will save you the most money in the long run. If you’ve done your research and are itching to take a calculated risk, utilize your tax refund before dipping into your checking or savings accounts. Once you hit age 65, withdrawals not used for health care are treated just like k withdrawals and taxed at your current income tax rate. But now online banks, generally, offer the best APYs and require low or no minimum balance in return. You may use TurboTax Online without charge up to the point you decide to print or electronically file your tax return. Quicken products provided by Quicken Inc. You have until April 15 to contribute to an IRA for the tax year. Sign In. In five years that starts adding up how should i invest my tax refund or not. Since this windfall can make a difference in your finances inhere are five smart options for snould your tax refund. So, setting tx an emergency savings account needs to be a key part of your financial plan.