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How To Reinvest Your Tax Refund

What are you going to do with your tax refund?  The wisest thing that you can do is to reinvest your tax refund income in order to save for your retirement.  Don’t miss an opportunity to invest in tax relief.  You’re going to learn how to reinvest your tax refund and this will require some planning.  All you need to do is set up a transfer between your bank and a brokerage firm and your money is there.  Now you have to decide how and where to reinvest your tax refund.


Ways To Reinvest Your Tax Refund

Be sure and set up an emergency fund and put some of your tax refund income in it.  The average refund last year amounted to about $3000 according to  Instead of taking your tax refund money and spending it on a trip, new home appliances, or lavish dinners seriously consider ways to reinvest your tax refund so it will generate extra income for your retirement.  Ensuring a secure retirement for yourself should be your ultimate goal.  An emergency fund is important to cover the costs of unexpected car repairs or to replace damaged appliances.  You can now reinvest the rest of your tax refund income more aggressively into a long-term position that won’t require your attention for ten years.

Reinvest Your Tax Refund In Tax Shelters

Don’t forget to put the maximum amount into your work’s retirement plan.  By using funds from your savings account to live off of you can reinvest your entire tax refund into your retirement plan if it isn’t already fully funded. Put money into a Roth IRA account if you qualify because the money in your Roth IRA will increase without ever being taxed until you retire.  Have a broker help you file the paperwork you need to set up a Roth IRA account if you qualify.  Roth IRAs also give you the freedom to choose any investment that your brokerage account offers.  Be sure and visit the IRS website to get information on what contribution limits apply to the different types of IRA accounts.

It’s important to know which tax shelters to avoid.  Don’t reinvest your tax refund into annuities or municipal bonds.  Fees for annuities are so high that it’s better to reinvest your tax refund elsewhere.  Don’t be like many individuals and reinvest your tax refund into annuities that won’t give you the returns you need in order to save up the retirement income you’ll need to live comfortably.  Municipal bonds have very low investment returns that don’t make them worth investing in.

 Investments To Reinvest Your Tax Refund Into

  • Determine how much money you need to save and the amount of income you’ll need that investment to generate to reach your savings goal by the time you retire.  Many calculators online can help you do that.  To find a good retirement calculator go to
  • Amount of savings x return = goal is an equation you can use to figure out your retirement income.
  • If you need to save $500/mo x 9% to reach retirement goal but can only save $400/mo you may need to lower what you expect to receive in funds at the time of your retirement or increase the return you expect on your monthly contribution.
  • If you need a 9% return save steps by finding the investment that has a good record of providing that return.
  • Don’t be overwhelmed by the myriad of investment options that await you.

Develop Your End Game

Don’t drive yourself crazy trying to think about every possible investment to reinvest your tax refund money in.  When you’re seeking to reinvest your tax refund make sure that you focus only on those investments that have a solid record of producing the return that you are looking for.  This is all you really have to do.  Don’t become guilty of visiting “the financial pornography channels” as discussed by CFP and author of the book Behavior Gap Carl Richards. Why take extra risks with your tax refund money when it isn’t necessary.

How To Pick The Actual Investment To Reinvest Your Tax Refund Money Into

At this point you are finally ready to invest your tax refund money in order to help you prepare well for your retirement.  Start by taking the money you’ve placed into your emergency fund, pick your preferred tax shelter, and then start searching for possible investment so that you can keep from making the mistakes that most investors are prone to make.  You will avoid the need to grab these dollars when the market is at a low point.  Now that you’ve chosen a good tax shelter you won’t have to fear overpaying your taxes and you’ll have another chance to reinvest your tax refund income.