4 Investing Ideas for Your Economic Stimulus Tax Rebate Check |
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Today's post comes from Miranda Marquit. She writes about personal finances for YieldingWealth and edits debt consolidation information for Destroy Debt.
The "economic stimulus" tax rebates have begun arriving, and now people are wondering how to spend them. Instead of blowing all that cash on something you don't actually need, why not put part -- or even all -- of that money to work for you through investing? Here are 4 investing ideas for your "economic stimulus" tax rebate check:
- Retirement account - If you aren't putting the maximum amount into your retirement account, why not use that tax rebate check to bring it up to scratch? Even with a modest rate of return (around 7 percent) over 20 or so years, you can make a big difference in the end result if you put the money in your retirement account.
- Index funds - In general, the stock market is struggling a bit. This means that now is an ideal time to get in (you know, the old "buy low, sell high"). You can buy more units for your money. And if you choose index funds, you can enjoy instant diversification. Over time, the stock market gains. You can take advantage of that buy getting in now, even though the returns are modest, averaging between 7 and 11 percent.
- Cash - This is not going to get you a great return right now. But cash investments (like a high yield savings account or a CD) can be a good way to build your emergency fund. And they are safe, if you use a bank that is FDIC insured. You can pad your "rainy day" fund with an infusion in the form of your tax rebate check. The money will grow (albeit slowly), and offer you a bit of a safety net. Besides, the Fed has to start raising rates again sometime. When that happens your savings account yield will increase, and you can ladder CDs into something with a better return.
- Growth stocks - If you're the type of person who can stomach a little more risk, this might be a good opportunity for you invest in some growth stocks. These stocks are riskier, and you could end up losing the money, but it you choose carefully, you just might parlay your tax rebate check into some serious stimulus for your investment portfolio. One of the more promising sectors is clean tech.
What you choose to do depends on your risk tolerance and your investing style -- as well as your individual needs. But no matter your decision, you can put this "found" money to work.
This post deals with:cash investments, debt consolidation, diversification, Economic Stimulus, emergency fund, fdic, growth stocks, high yield savings, high yield savings account, index funds, Investing, personal finances, rainy day fund, rate of return, rebate check, retirement account, safety net, stock market gains, Tax, tax rebate, tax rebates
... and focuses on:Investing
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You forgot to add pay off debt
Is paying off debt, really an “investing idea”?
Lazy Man,
As funny as conventional wisdom is, value stocks seem to outperform growth stocks over vast periods of time.
http://www.gummy-stuff.org/returns.htm
I buy value stocks myself. This is guest post from an author of who isn’t me ;-).
I think it makes sense to add in outside voices every now and again.
sorry, overlook the title
I agree with Dividend growth investor, value stocks do better long term. I have one in my retirement acct along with an index fund
I will use my check in the future when I retire. The economy is going in the tank and I am saving everything I can.
I, too, prefer value stocks as a base. But every now and again, when my risk tolerance can take it, I like to mix up with a carefully chosen growth stock or two. It’s given my investment portfolio a shot in the arm on more than one occasion.
And this “found” money (that - no mistake - we will have to pay back with interest down the road) is a good opportunity to play a little with my investments.
Great ideas. Certainly more lucrative than investing it in a weekend of fun.