Investing your tax refund

Budgeting expert Joni Kearn of Freedom Financial says we should be investing at least a quarter of our income tax refund. She broke down the numbers for us on Good Day Wisconsin.

Kearn says the average 2013 IRS refund was $2,985 and the average 2011 WI tax refund was $2,463.

Taking those numbers as an example,  she suggests you spend it like this:

½ paid down debt – $2,750

¼ fun money – $1,375

¼ long term savings – $1,375

When it comes to long term savings, Kearn has the following suggestions:

One-time investment of $1,375

10 years @ 8% interest – $2,968

20 years @ 8% interest – $6,409

$1,375 every year for:

10 years – $19,919

20 years –$62,923

30 years – $155,764

Monthly investment of $50

10 years – $9,147

20 years – $29,451

30 years – $74,518

Options for investing:   Roth IRA, Annuities, Bond funds

 

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