Submitting your tax return might seem like a chore, but this year, before you race off to the shops on a spending spree, consider a few smart ways to use your tax refund. Below are some ideas to get you thinking about how you could invest that money.
- Pay off personal debt
Do you have a credit card debt or a personal loan that seems to be taking forever to pay off? These types of debt attract a high interest rate, so why not consider using your tax refund to lower your credit card debt or pay it off.
- Offset your Mortgage
If your mortgage is set up with an offset option, it is a great idea to use your tax refund to offset your repayments. Instead of receiving interest on your savings each month, your offset account balance is subtracted from your outstanding mortgage loan balance to calculate the interest component of your mortgage payment; meaning you’ll end up paying less interest on your mortgage. You can pay your home loan off quicker while your offset account balance is still free for you to use.
- Add value to your home
Renovating can add value to your property as well as make your house feel more like a home. Just be aware that like any other investment, property markets aren’t always guaranteed to rise. Overcapitalising when renovating or focusing on the wrong areas can be easy mistakes to make. Stick to a budget and don’t try to do too much too quickly with only a limited amount of funds. Even painting just one room can freshen things up for the new financial year.
- Make an investment
Perhaps you want to invest in real estate, or purchase some shares, but you’ve been waiting for an extra cushion of cash. If you’ve done your research, now might be the perfect time for you to utilise your tax refund and take the calculated risk!
- Top up your super
Depending on your circumstances, you can increase your super by adding a personal contribution to your super fund. Making after-tax contributions is a simple way to add to your super and boost your account savings. Just contact your superannuation fund for advice – your “future self” will thank you when you retire!