Smart Ways to Invest Your Tax Refund
April 21, 2010
Investing Your Tax Refund
What are you going to do with your tax refund? One option would be to spend it but if you’d like to hang onto that money for a while, Investopedia came up with a list of smart ways to invest your refund. They start off with some of the most secure options if your goal is to preserve that money and then move onto some low cost ways to invest your money if you’d like to see it grow more quickly.
Ally Bank CDs
For safety, they suggest Ally Bank CD’s since they are FDIC insured, have no minimum amount or fees, and have competitive rates:
- 3 – 5 year High Yield Certificate of Deposits
- Penalty-free CD
High Yield Online Checking & Savings Accounts
While these online banks won’t pay as much interest as much interest as a CD, they will pay more than your typical savings account and your money will be available for withdrawal at any time. They recommend:
Low Minimum IRAs
Since your tax refund probably isn’t thousands of dollars they looked for options that had a low minimum balance and low fees that would give your refund a better chance to grow and compound.
The article doesn’t mention it but a TradeKing IRA is an option with no annual fee and no account minimum.
Zero Transaction Fee ETFs
These options let you trade ETFs for free and exchange traded funds have relatively low expense ratios:
- iShares through a Fidelity account – S&P 500 (IVV), Russell 2000 (IWM), MSCI Emerging Markets (EEM)
- Charles Schwab ETFs
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All posts by Ben Edwards