Like many Americans, you might have a recent tax refund that you’re not sure how to adequately spend. In this case, the seasoned tax planning professionals, at Bergamo Tax & Financial Solutions, suggest that their clients in Watertown, CT, invest their refunds to make the most out of their money. Because the investing process can be intimidating, these accountants offer the following advice.

Mitigate High-Interest Debt

Some credit cards have exceedingly high interest rates. That means that paying the minimum each month isn’t enough, as much of that payment will go towards interest (and not the debt itself). Consider using your refund to increase your payments so that you can chip away at the debt amount.

Use It for a Down Payment on a Home

The more your home down payment is, the less your mortgage will be. That’s why many tax planning professionals recommend adding sizable refunds to your down payment. If you already own a home, consider using your return to make some much-needed improvements, which will increase the resale value.

Increase Your 401(k) Contribution

While many employers match 401(k) contributions, workers might still be reluctant to offer up a sizable chunk of their paycheck. However, investing in the future is important, and you can use your tax refund to cover everyday living expenses while increasing the amount you currently contribute to your 401(k). Remember, contributions are pre-taxed.

Invest in a Stock or Start-Up

With the right knowledge, you can maximize your refund even further. This is the case when investing in a stock or promising start-up, which can result in an amazing return on your investment. However, keep in mind that this is a risky proposition even for those with experience, so only pursue this option if you’re already financially stable.

If you’re looking for more financial guidance for yourself or your business or need help with the tax planning process, the team at Bergamo Tax & Financial Solutions is your trusted source. They also offer help with estate planning. Visit the website for more information on this Watertown CPA firm. You can also call (860) 274-1655 to speak with an accountant today about your specific needs.