May 11, 2021

Investing your tax refund: How you could turn the average refund into $100,000 through an ETF

Though tax returns aren’t due for another month, you may have been an early bird and filed yours already. In fact, you may already be sitting on your refund.

But what should you do with that money? Many people have been hurt financially by the pandemic, so you may need your refund to pay for things like housing, groceries, or other essential bills. And if you don’t have a healthy emergency fund — enough money in the bank to cover at least three months of living costs — then your tax refund should go directly into the bank.

But what if you’re doing OK financially and don’t need your tax refund for a specific purpose? In that case, you have a prime opportunity to turn that refund into a whopping sum of money. In fact, you might manage to turn your refund into $100,000 — or more. The average tax refund issued this year as of April 2 was $2,893. That’s more than twice the amount of the stimulus checks that recently went out to the public. If you’re sitting on a comparable sum, investing it wisely could help it turn into a cool $100,000.

But what if you’ve never invested before and have no idea how to pick the right stocks to help you achieve that goal? Well, here’s some good news — you actually don’t need to know a whole lot about the stock market to do well in it. In fact, there’s a specific investment designed for people in your boat — S&P 500 index funds. S&P 500 index funds, like all investments, come with risk. But over time, the S&P 500 has managed to deliver solid returns, so if you stick with S&P 500 index funds, there’s a good chance you’ll manage to grow your wealth substantially.