Where is your Tax Refund Going?
Nothing was better than tax refund time especially when I was a single mom of 2. I at the time could not afford to splurge and spend all year so I would often wait until tax season to splurge on myself.
The only issue was that because I would blow right thru it, I would eventually be in the same position I was the year before: Broke.
So I decided to take a small chunk of it, around 20-25% of it and start investing in IRA’s and a couple of bonds. That way I could reward myself and still have a little reward as well.
With each tax season, the 20-25% increased to 30% and now I invest the whole thing. What I forgot is that if you 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
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 about IRA 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
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 %. If you feeling a little risky you can do their level E at 16.8%, I like those numbers. 🙂 If you want to know more about ETF’s Click Here.
This is an opinion based article I wrote from several investment platforms of information. If I touched on something you would like to know more of drop your question below.
Once again thank you guys for reading.