Expecting a tax refund? Before temptation overbears reasonable thinking, I’d like to offer a boring, yet smarter, way to use your money: Invest! If you have been neglecting the investing department, now may be your best opportunity to do something smart with your money.
According to the IRS, the average refund was $2,427 in 2007 (this doesn't include those who had to pay). Through March 23rd, 2007 the IRS processed over 70 million returns, with 89 percent of those filers receiving refunds. What will most Americans do with the money? Spend it. What should they do? Invest it.
Best Places to Invest Your Return
Your best bet is a mutual fund. By investing directly with a mutual fund company, you can avoid trading costs and you are able to diversify by owning many stocks. Whether you are putting your tax refund away as emergency money or using it to help build your retirement, by keeping the money out of your savings or checking account, it is unlikely you will spend it and you can actually make money off it! Even if the stock market decides to stay flat for the next few years, at least you committed to saving your money rather then spending it.
These links should help you get started:
The Challenge
Even if I have convinced you that investing is the right thing to do with your tax refund and even if you tell yourself that this is what you are going to do with the money, is that really the route you are going to take? It is too easy to let the little things get in the way. It is important that you shut off that little voice in your head that says “it’s not that much money anyways” or “it’s too much work to find a place to invest,” because you are only lying to yourself.
Investing is easy – getting yourself to actually do it is the hard part.
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