How to be a badass with your tax return — and be different from the masses.
The average tax refund is now $2,893 a year. You can use get rich off your tax return.
1) Save $44,000 and 10 years on your home mortgage
If no additional payments are made, an average home will actually cost $311,000:
If you take that tax return of $2,893, split it up to $241 a month, and add it to your mortgage payment — you’ll save $44,000 and 10 years of payments:
You could save $44,000 and pay off your home 10 years faster using your tax returns.
Pretty cool, huh? That’s just ONE way to get rich off your tax return. Here’s another option…
2) Pay for your child’s college education
Open a 529 Plan with your state, an educational institution, or with an investment firm — because then you won’t have to pay taxes!
Put that tax return of $2,893 a year into the 529 account. Invest that a mutual or index fund that isn’t too risky but still has decent returns (“moderate risk”). Let’s say we earn 7% annually. If you aren’t sure how, keep reading!
If you start around when your kiddo is born, then when they graduate high school in 18 years, that money will have grown to over six figures!
Investing an average tax return will more than cover in-state tuition, fees, and more— plus you won’t pay taxes on it!
Affording your kids’ college is another way to get rich off your tax return. More on paying for college here.
Imagine how much richer and more relaxed you will feel without the burden of paying for college as it is happening. And last but not least, instead of buying a TV, you can get so much more for yourself with that money if you have patience and invest it!
3) Invest in number one! Treat yo self!
If you put that $2,893 a year into a retirement account, like a Roth IRA, that will sweeten up your retirement for sure! After 40 years, that will — very conservatively and accounting for inflation — grow to $420,000!
That is $300,000 is basically FREE MONEY. Definitely getting rich off your tax return!
You SHOULD also invest more of your income toward retirement, but this certainly makes investing for retirement less daunting if you use your tax like this! Plus, like the 529 Plans, retirement accounts have tax benefits!
So if you believe you are already on track for retirement saving and you can have patience, another option could be investing in a stock market index fund. These funds carry more risk but the potential for higher reward.
You could reach that $420,000 mark about eleven years sooner.
Again, prioritize retirement over other investments! If you’re still confused about where to start with investing, keep reading.
One last thought…
Consider this: receiving a large tax return means that you technically gave the government an interest-free loan in that amount. You will NEVER find an interest free loan offered to you The most profitable thing for you to do, if you have the diligence, is to make your tax return as small as possible — without having to pay more at tax time. Essentially: pay less taxes (deductions) each month. That way you can invest that money each month rather than waiting for the government to give it back.
Still not sure how to get started? Check out this course!
Disclaimer: I don’t account for inflation in the calcs above. The important thing to remember is that even with 2–3% inflation a year investing is still a fantastic way to earn money and may be the best way to beat inflation!