Tax Refund Investment Solutions
Tax refunds require some considerations.
First of all, you should consider the tax situation you are currently in. Also you have to make some adjustments to the withholdings you make. You should remember that this tax refund doesn't represent a special award, but just you are getting the money you have paid back.
Secondly, if the tax refund is of significant amount, consider the option of reinvesting it in something that will return you profits in the future. Avoid spending the money on something you will later regret.
The exact nature of the investment will depend on your current position and on where you want to be in the future. The achievement of your goals depends on the time horizon you have for investing as well as the risk tolerance you possess. So, before you invest the money take a minute and consider these factors.
Depending on the amount of time you have before you as well as the various investment solutions you can take different courses of action.
Time Horizon | Recommendation |
---|---|
2 or less years |
We
recommend the investment in the following:
Despite the relatively low returns you will get, these investment solutions provide high level of security, since the main concern should be on preserving the capital you have accumulated. |
2 to 4 years |
We
recommend the investment in the following:
This somehow longer period provides you with more flexibility than the previous one. On the other hand, if you have a goal of saving for future large expenses (e.g. college tuition), it is recommended that you maintain part of your money in fixed income products, such as the ones mentioned in the previous time period. |
5 or more years |
We
recommend the investment in the following:
The latter should serve to balance your investment portfolio against the risks related to stocks. Stocks are beneficial since they offer higher rate of growth. Characterized by short-term volatility, you should keep in mind that it will be hard to predict their price at the time you will need to withdraw your money. Finally, be aware that stocks are one of the most risky investments. |
Final Piece of Advice
If you have a short time period in front of you, the investing approach you should apply should be more conservative. Remember that the higher the potential returns the higher the associated risk is. Additionally, stocks with high level of returns are accompanied by higher volatility. Often times market fluctuations will have a discouraging effect on you, but try to ignore it and let the more aggressive investments award you with their high returns, but only if you have a longer time period in front of you.
Opening a OptionsHouse account to benefit from their low $3.95 stock trades (currently they offer 100 free trades) is a smart idea.
Rate this article : Low | High |
- Securities and Exchange Commission Complaint Procedures
- Telecommunications Technology Securities’ Fraud Alert
- Taking Note of Broker Discussions
- What Is Day Trading?
- Margin Requirements for Pattern Day Traders
- How to Obtain Corporate Reports
- Ex-Dividend Date and Record Date Explained
- Convertible Securities’ Risks to Common Stock Holders
- Cross-Market Trading Circuit Breakers
- Choosing an Investment Professional
- Callable Bonds
- Rebalancing Your Assets
- Diversification of Assets
- Tips for Variable Annuity Investors
- The Costs of Variable Annuities
- Characteristics of Variable Annuity Products
- Investors Beware of Government Impersonators
- Prepaid Tuition Plans versus College Savings Plans
- Investing in Interval Funds
- Options on Securing Your Securities
- Funds of Hedge Funds
- Investing in Hedge Funds: Pros and Cons
- Investor Alert: How to Avoid Investment Fraud
- What Happens When a Public Company Goes Private
- The Pros and Cons of Exchange-Traded Funds
- Investing in Equity-Indexed Annuities Explained
- What Are Promissory Notes and How to Avoid Promissory Note Fraud
- Asset Allocation – Choosing the Best Allocation Strategy
- Investor Information: Finding Legal Help when in Dispute
- Dispute Resolution for Investors
- Financial Analysts: NYSE and NSAD Rules and Disclosures
- What Investors Need to Know about Auto-Trading Programs
- What Investors Need to Know about After-Hours Trading
- Tips for Researching Investments: Uncovering Analyst Conflicts of Interest
- Stock Analyst Recommendations - Should We Trust Them?
- Bank Demutualization - Frauds to Watch Out For
- Direct Stock Purchase Plans
- Auditing Essentials
- Lost or Stolen Stock Certificate?
- Holding Your Securities: Direct Registration
- Holding Your Securities: Street Name Registration
- Holding Your Securities: Physical Certificate
- Understanding Trade Execution
- Online Trading - Issues and Solutions
- Advice on Trading In Fast-Moving Markets
- SEC Order-Handling Rules
- Buying Stock on Margin
- Understanding Margin Calls
- Day Trading Profit and Risks
- Stock Market Day Trading
- Short Selling Risk
- How to Transfer Your Brokerage Account Smoothly
- Things to Consider When Opening a Brokerage Account
- Risks of After-Hours Trading
- Understanding After-Hours Trading
- Ex-Dividend Date - Why It Matters
- Government Bailout Plans
- Investment Opportunities in Times of Financial Crisis
- Short Interest Ratio Monitoring
- Insider Trading Tracking
- Invest in Utility Stocks during Recession
- Strategies to Deal with a Weak US Dollar
- Don't Turn Your Stock Expenses into Stock Losses
- Why Price/Cash Flow is Important?
- Profit from Dividend Paying Stocks
- Simple Stock Selection Tips
- Stock Option Strategies
- Year End Tax Planning and Portfolio Considerations
- IPO Basics and Strategies
- Market Leaders and Stock Investing
- How to Select a Winning Company
- When to Apply Averaging Down
- Down Market and Discounted Stock Opportunities
- Stock Attachment Can Blur Our Judgment
- Management of Investment Decisions Through Stock Screens
- Buy Low - Sell High, Buy High - Sell Higher
- How to Select a Winning Stock from a 52-Week List
- Stock Portfolio Balance Maintenance Techniques
- Stock Market Trends and Signs
- Tips on Winning Stock Picks
- Government Deficit and Stock Investors
- Stock Price Forecast
- Strategies to Deal with a Down Market
- Speculative Derivatives Expiration
- Shunning Emotions from Stock Investing
- Constructing a Successful Stock Purchase Plan
- Economic Fundamentals Importance
- Positive Predictions on Interest Rates Move the Market
- Iran Events Might Influence the Stock Market
- Stock Market Movements
- Determining the Number of Stocks to be Included in Your Portfolio
- Long-Term Stock Investing Advantages
- Take Emotions out of Stock Investment Decisions
- Market Timing Hidden Traps
- The Best Investment Style for Your Financial Objectives
- Dollar Cost Averaging Benefits
- Long-Term Rewards of Stock Investing
- Business Fundamentals vs Management Quality
- Tax Refund Investment Solutions
- Deep Debt Considerations
- Tangible Goals Motivate Investing
- Selecting Your Investing Strategy
- Longevity Risk and Retirement Plans
- Has the Time for Selling Stocks Come
- The Simplified US Tax Code Proposals
- Tax-Free Investments
- Stock Tax Implications
- Value Investing Basics
- The Warren Buffett Way - Principals for Successful Investment
- Warren Buffet - Investing with Intelligence and Patience
- Common Stock Investing Strategies
- Investment Strategy Types
- Dogs of the Dow Performance
- DRP Types and Benefits
- Avoiding Bad Stock
- High Risk, High Return
- Purchasing Your Company’s Stock
- Dogs of the Dow Investment Strategy
- Stock Portfolio Diversification
- Direct Stock Purchase Options
- Per-Share Price vs Market Cap
- Non-Financial Characteristics of a Successful Stock
- Cash Flow Valuation
- Beating the Market Strategy
- Institutional Investors and Their Influence on Stock Trading
- How to Benefit from Short Sellers
- When to Sell a Stock
- Personal Reasons for Selling Stocks
- Stock Market Prices and Buying Strategies
- Assessment of Risk Tolerance
- Trailing Stop Order Basics
- Investment Risk Tolerance Level
- Investment Risk Types and Advices
- Long-Term Stock Investment vs Short-Term Trading
- Electronic Trading vs Stock Exchange Trading Floor
- Stop Loss Order Fundamentals
- Stock Order Types
- Bull and Bear Market Strategies
- Minimize Your Stock Losses
- Stock Trading Basics and Order Types
- Types of Stock Market Losses
- Stock Protection Options while You are Away
- Avoiding Stock Market Fraud and Scams
- Before You Buy Stocks
- When to Buy and Sell Stocks
- Stock Trader vs Company Investor
- Stock Diversification Tips
- Stock Buyback Benefits to Shareholders
- Stocks and Inflation Rate
- Allocating for Investing Purposes
- Stock Market Returns Pitfalls
- Real Rate of Return on Investment Calculations
- How to Avoid Pump and Dump Scams
- Tools and Researches Offered by the Best Online Stock Trading Sites
- Bond Tax Rules
- US Treasury I Bonds Basics
- Bond Ladder Basics
- Zero Coupon Bonds Tax Implications
- Zero Coupon Bonds Basics
- Municipal Bonds Tax Dilemmas
- Traditional IRA and Roth IRA Tax Benefits
- The Long-Term Scope of Stocks
- Investing According to Dow Jones Industrial Average