What Should I Do With My Tax Refund? How About Investing It?

If you have already visited your Accoutant or filed your 2006 income taxes on your own; you may want to think about investing the money (provided you are receiving a refund and don't owe). Some may ask why investing your tax refund is a smart move, while others can’t wait to cash the check. Interestingly, financial advisors recommend using one time "bonus money" (like a tax return, inheritance, etc) on one time purchases like investments or to pay down a credit card, NOT for paying bills. Paying bills should come from ongoing money, like your salary.

Here are some investment ideas: 

If you own your home, it may be the most important investment you ever make. How about making a couple of extra mortgage payments? Doing this once or twice a year can shave years off your mortgage. Since you also want the value of your home to increase, you could also make some improvements, repairs or additions.  This makes it more likely you will be able to sell it at a higher price.

Another way to invest the tax refund is to apply it towards a bank CD, or increase your IRA account. Think about your retirement fund; maybe you would like to increase the amount you are paying into it now that you have this money available. 

Do you have credit cards which you need to pay off? While this may not seem like an investment, it can jumpstart getting that debt off your back and help you save a lot of money in interest.

What about using the money to start a home based business, something that will likely decrease your tax burden until it's profitable, at which point it will help you increase your income? You could take an existing hobby or skill and turn it into an additional stream of income without leaving your home using the internet. Check out the Natural Mom Business Guide for step by step how to tutorials on launching and marketing an online business while honoring your life choices.