What will you do with your Tax Refund this year?
82% of taxpayers are likely to get a refund this year *
Average tax refund is $2,112 *
* Sources: Australian Taxation Office Annual Report 2013/14 & 2014/15)
What do people do with their tax refund?
- 29% – Paid bills
- 21% – Saved it
- 16% – Didn’t get a refund
- 13% – Loans or credit card payments
- 9% – Home loan payments
- 5% – Holiday
- 5% – Other things (including engagement ring, education, car rego/tyres, party)
- 2% – Household appliances
(Source: MoneySmart poll, August 2015 (n-2124))
Tips on how you can make the most of your tax refund:
1. Reduce Debt Stress
You may have a mortgage, credit cards, personal loans or outstanding bills. Reducing any of these debts will remove unwanted stress, and of course overall interest that you pay!
You should concentrate on loans with higher interest rates like credit cards first. The savings can be substantial!
2. Invest in yourself
You could consider investing in a gym membership for instance, or a new pair of running shoes, or even a personal trainer… chances are you will save on healthcare costs later in life!
Fixing or renovating parts of your house can also assist to improve your lifestyle, whilst adding value to your property in the mean time. It could also save you on repairs and maintenance in the future.
Invest in your future income earning capacity.
Invest in a course or some form of further education. This can increase your chance of getting into a higher paying job (and maybe even something you enjoy more!)
You may also like to make yourself feel fabulous by investing into someone else. Perhaps a charity that is close to your heart, or even investing in your own children. Investing money into an education fund for your kids can be one of the most satisfying investments you can make.
3. Building future wealth
We of course, can’t avoid the probably most expected option, of investing for your future.
If you were to invest $2000 from your tax return in the first year, then every year after that invest another $2000, over 39 years the investment would increase to $240,000! That’s only $80,000 of your money contributed, but $160,000 in compounding interest over the period. (this is assuming an annual rate of 5%).
Of course, these are just average figures and don’t take into account a large number of variables throughout a persons’ life, or fees and costs. But it does illustrate the power of regular investing!
If you would like to discuss what to do with your return this year, we would love to hear from you!
*Roha Pty Ltd, As Trustee for The Tyrell Family Trust, Trading As: Vivid Accountants & Advisers, ABN 25 146 761 364 is an Authorised Representative of Count Financial Limited.
Bronwyn Tyrell is also an Authorised Representative of Count; Authorised Representative Number: 288117.
‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count. www.count.com.au
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.
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Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.