Make the most out of your tax refund

IF you are paying taxes, there are important considerations to make at this time of year, particularly if you are due to receive a tax refund from the Australian Taxation Office.

Just imagine seeing a couple of thousand extra dollars in your bank account, and what you could do with it.

The average tax refund for an individual is $2574.

But all too often when individuals receive their tax return, they spend it, rather than considering what they could actually do with the extra money.

Here are three ways to make the most of your tax returns: WHEN receiving a tax refund, a smart move is to put money aside, rather than spend it on unnecessary goods that make someone else rich.

Only 21 per cent of Australians save or invest their refunds. Worse, on average 12.7 per cent of those aged 25-35 save.

A survey by the Commonwealth Bank found 56 per cent of people wouldn’t have enough savings to handle a temporary loss of income and one in three households are unable to find $500 in an emergency. INVESTING your tax refund is one of the best strategies to accelerate your wealth. Investing your tax refund in the stock market every year is a great way to do it.

Make 11.4 per cent per annum over 20 years and continue to invest your tax refunds of $2500 yearly, and you’ll have around $195,339. IF you are not in a position to invest your money, use your tax refund to pay off debt. The Australian share market was largely flat for most of this week, until yesterday, when it accelerated.

Rises in bank shares helped boost the market and prevent it falling away.

That said, the risk remains for a further short-term decline in this sector, unless bank share prices can jump shortterm price hurdles. DALE GILLHAM IS CHIEF ANALYST AT WEALTH WITHIN