Is the IRS sending you a refund this year?
Many people look at a refund as a “gift” from the government.
However, it is really just the government giving back the excess taxes you paid last year.
So, if you are going to receive a check this spring, how are you going to use it?
First, let’s be clear about tax refunds.
When you receive a refund, you have used your money to finance the government and it is returning that portion it couldn’t legally hold on to.
Your first step is to adjust your withholding or quarterly tax payments so next year there will be no refund and little if any payment due.
In other words, you want to come out even: no refund and no payment.
But, that’s next year. What are you going to do with this year’s refund?
First, pay off any high-interest debt such as credit cards. That is the best investment you can make.
If you have little or no high interest debt, consider investing the sum in stocks or bonds.
What type of stock or bond you choose is a matter of your age, risk tolerance and other personal factors.
The important thing is to find a good, solid, long-term investment opportunity.
Don’t worry too much about the stock market, instead focus on finding good companies selling at a discount.
Good companies will weather a recession and come back stronger. They will run with a fast economy and grow even larger.
Despite what you may have heard, you are under no moral, legal or patriotic obligation to buy a large-screen TV.
Invest in yourself and your family’s future by investing in a good stock(s).