The 3 Best Investment Plans for Your Tax Refund in 2018

Do you know where you tax refund is going? When I was a single mom of 2, no time was more anticipated than tax refund time.  At the time, I couldn’t afford to do a lot of extra spending so I would often wait until tax season to splurge on myself. The only issue was that I would always blow right thru it, and eventually end up in the same position I was in the year before: Broke. So I decided to take a small chunk of my refund, around 20-25% of it, and start investing in IRA’s and a couple of bonds.  This way I could splurge on myself and still have a little investment reward as well. With each tax season, the 20-25% increased to 30% and now I invest the whole thing. What I realized is that if you take steps to pay yourself first, eventually you will stop being in the position to have to wait until tax season to buy a car, or go on vacation. So it made me think of the upcoming tax season. How can WE get more bang for our buck and not wait until tax season to reward ourselves? Here are the top 3 investment plans for 2018.

1. IRA

An IRA is a Individual Retirement Account, there are 2 types of IRA’s: Traditional and ROTH. If you don’t know which to choose, here is my break down.

Traditional– has no income barrier. Can be used at same time as your 401K, is best to be used if you think you will be in a lower tax bracket at retirement.

Will be taxed at that withdrawal of funds. Contributions are tax deductible in federal and state. Must start withdrawal at 70 1/2.

ROTH-can only be used if filing single making under 135K and filing married making under 199K . Ideal for those who think they will be in a higher tax bracket. Withdrawals can be made without penalty but only the initial contribution, not earnings.

Is taxed going into the account, can be transferred to family members, no mandatory withdrawal age. Want to know more Click Here.

2. Stock Investments

Is not for everyone, a couple of things to consider before investing is how much risk you can tolerate, your budget, and short verses long term holding. I have recently wrote an easy step by step guide in understanding the stock market. If you want to know more about stock investments Click Here. 

3. ETF

An ETF is an Exchange Traded Fund, is basically a bucket of stocks It trades like stock on the stock exchange. Instead of buying into a company like a stock does it buys into a industry. This is a lot safer than a traditional stock because you are investing in multiple companies instead of just one.Stick to the popular more well known ETF’s.  There are currently 5 different levels of risk, with A being the safest with a rate of return at 5.6 % for a more riskier bet you can try their level E at 16%. If you want to know more about ETF’s Click Here. There are other great options for investment plans. This is an opinion based off of several investment platforms of information. Always do your own research.]]>

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