Advertising
Advertising

4 Surprising Ways You Can Invest Your Tax Return for Even More Money

4 Surprising Ways You Can Invest Your Tax Return for Even More Money

When most people get their tax returns back – which can sometimes reach a few thousand dollars – it’s almost like scoring another payday. But the problem with these returns is that people tend to look at them as “free cash” or “play money,” when the reality is that you earned that money. It was simply withheld from you and is finally coming your way.

If you want to be smart about how you use your money, you shouldn’t just go out and blow the money on discretionary purchases. In fact, this is the perfect opportunity to dip your feet into the investment world. While you may not be able to get involved in high-dollar investments, you can certainly try some avenues that only require a few hundred or thousand dollars to get started.

Here are a few:

Advertising

1. Penny Stocks

While there’s no reason you can’t get involved in standard stock trading with a few thousand dollars, it’s not always the smartest move to go from no investing activity to high-dollar stock investments. Instead, you may want to get started with lucrative penny stock investing.

As the name suggests, penny stocks are stocks that are typically priced at less than one dollar. While these stocks are much less regulated than the ones you see on the Dow Jones, Nasdaq, or S&P500, they can also grow at a much swifter pace. Check out this guide to see if this could be a good low-entry investment for you.

2. Mutual Funds

Are you interested in standard stock market investing – but afraid of the risks? You can actually eliminate much of your risk by choosing mutual funds. While most require a minimum investment of a few thousand dollars, some will even let you get started with just a few hundred dollars.

Advertising

In a mutual fund, your money gets pooled together with thousands of other investors and a mutual fund manager then diversifies the funds across many different high-performing stocks to yield strong returns (without heavy risk). When the stock market is performing well, you can earn very solid returns.

3. Peer-to-Peer Lending

If you’re willing to take on a bit more risk – and like the idea of helping others – you may consider peer-to-peer lending. This direct method of debt financing lets individuals – like yourself – lend money to people who need financial assistance to pay for home improvements, launch a business, or purchase a car.

Using a website like Lending Club, you can choose who you want to lend to, set the terms, and collect interest. While there is a certain amount of risk associated with lending, the average rate of return is generally between five and eight percent. Not bad!

Advertising

4. Make a Down Payment on Real Estate

Everyone knows just how profitable real estate investments can be, yet few of us ever have the funds to get started. Well, now is as good a time as any to start building your real estate empire.

With just a few thousand dollars, you can place a down payment on a small rental property that you can then use to cash flow a few hundred dollars per month. By doing your due diligence and making a smart decision, you can also expect most properties to naturally appreciate over time. It’s a great way to diversify your portfolio.

Make Smart Choices

People often complain about not having enough money to set aside for investments. Well, maybe it’s time that you start looking at your annual tax return as an investment fund that can be used to fund things like penny stocks, peer-to-peer lending, down payments, and other things. You won’t be sorry!

Advertising

Featured photo credit: Julien GONG Min via flic.kr

More by this author

Anna Johansson

Anna specializes in entrepreneurship, technology, and social media trends.

20 Best Mac Apps for Productivity You Need in 2020 10 Uplifting Positive Affirmation Apps That Help You Re-Center on the Go hourglass as time is wasting 15 Ways You Are Wasting Time During the Day (And How to Stop) When You Have These Recipes, You No Longer Need to Suppress Your Appetite for Dessert. itchy skin 4 Natural Ways to Soothe Your Itchy Skin

Trending in Money

1 How to Develop a Millionaire Mindset in 6 Simple Steps 2 How to Eat Healthy on a Budget (The Definitive Guide) 3 9 Millionaire Success Habits That Will Inspire Your Life 4 Top 5 Spending Tracker Apps to Manage Your Budget Smart in 2020 5 How to Set Financial Goals and Actually Meet Them

Read Next

Advertising
Advertising
Advertising

Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

Advertising

2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

Advertising

If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

Advertising

4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

Advertising

5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

More About Thinking Smart

Featured photo credit: Austin Distel via unsplash.com

Read Next