The Wisest Ways to Invest Your Tax Refund


According to the IRS, the average tax refund for 2011 is $2,985. How will you spend it? You can buy a ticket to Vegas and blow it on the tables, buy a pair of Louboutins, or you can take a more mindful approach. Here are some great investment tips from Louis Barajas, personal finance expert and author of My Street Money.

Invest in a Roth IRA

Most Latinos don’t have a retirement plan. Start your own Roth IRA through a credit union or bank. That money grows tax-free, and when you retire and pull the money out, none of it is taxable. It’s also great for young people. You can put up to $5,000 a year.

Pay off your credit cards

Pay off the ones with the highest interest rate first. If you have a $2,000 refund and you owe $2,000 on a credit card that charges 19 percent and pay it off, you basically made 19 percent on your money. If you stick it in a savings account, it’s earning less than one percent.

Invest in yourself

The economy is tough and so are jobs. Do a self-evaluation on how you can invest in yourself to upgrade your skills. You may need to take computer class. Ask yourself, “What can I do to invest in myself and become more valuable at work?" For some, this may mean investing in a new wardrobe, which can boost your self-confidence.

Do some personal maintenance

There are a lot of Latinas that may have health insurance at their job but aren’t earning a lot of money, so they sometimes avoid going to the dentist or going to the eye doctor. Most jobs don’t offer optometry or dental insurance. Take a look at what you left on the back burner. You can also take care of yourself by joining a gym and getting a handle on your stress.

Start your own small business

In this day and age, $2,000 gets you internet service, a computer and a scanner. Anyone can start a business from home. As soon as you collect your first dollar, you’re officially in business!

Happy (and smart) spending!


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About this author

Grace Bastidas, Deputy Editor

Born and raised in Queens, New York, where more languages are spoken than anywhere in the world, Grace Bastidas is Latina’s Deputy Editor. She oversees lifestyle content, including topics as diverse as career, health and relationships, and occasionally writes about her own experiences in The Good Life section. As a writer, Grace’s work has appeared in The New York TimesNew York magazine, The Wall Street Journal and Travel + Leisure. She is fluent in Spanish.

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