| 

How a Financial Advisor Would Spend Your Tax Return


How a Financial Expert Would Spend Your Tax Return
PHOTO: Because I’m Addicted

Tax refunds are nothing to sneeze at: last year, taxpayers received $3,000 back on average, but if you’re someone who absolutely must plan ahead or hates surprises, you can use this calculator to estimate your tax return. So what if I told you that you could actually grow your tax return into something much bigger than that (think: potentially life-changing), with quite a few ways to do it?

Whether you choose to allocate your return in different ways or choose to put it all in the same place, financial experts weigh in on how you can use your tax return smartly—so, there’s no need to be unsure of what to do with your tax return this year. I’ll walk you through five of those ways below.

Keep scrolling to find out your new plan.

1. Pay Off Any High-Interest Debt


Ever have nightmares about your credit card debt and student loans? You’re not alone. Even though your tax return may not be able to cover all of your debt, it can certainly take some of that useless weight off of your shoulders so you can save your paychecks for something even better. Think of it as the government’s small gift of appreciation to you. LendKey can help you pay off your student loans by connecting you with community-based lenders so that you can enjoy lower rates, helping to pay off your student loans faster.

Don’t want to spend all of your money on paying off your debt? You don’t have to. Put a little bit of your return towards your debt and use the rest to invest for the future at the same time. Because why wouldn’t you want to have all of your bases covered?

Click here to create your free Investment Plan from Ellevest
PHOTO: Ellevest

2. Invest Your Tax Return


You may not binge watch the stock market, that doesn’t mean you are or should be, shut out from the world of investing. Now more than ever, investing has emerged as an important and empowering tool for women seeking financial freedom. Sallie Krawcheck, CEO, and founder of Ellevest, a digital investing platform made specifically with women in mind, has said time and again that despite having more financial power than ever, women are not putting their money in the markets—and it’s costing them a lot. As she said in a recent interview, “The gender investing gap costs professional women tens of thousands, hundreds of thousand—in some cases, millions—of dollars over the course of their lives.”

The thing is if we could close the gender investing gap, it could quite literally change the world if we closed it. As she told CNBC, “When women are financially stronger, it’s not just good for them, it’s good for their families, it puts money into the economy, the market—it’s good for everyone.”

In other words, women hold so much financial power but aren’t reaching their full potential. No matter how much you have to spare, invest a little bit of your paycheck along with your tax refund and see just how your money grows. If you’re worried about betting on a bad stock and losing all of your money, let me just tell you to know that that isn’t going to happen—especially if you have a diversified portfolio. Best of all, it doesn’t take much time on your part to do it.

The first thing you do when you sign up with Ellevest is you create a customized investment plan — for free — specifically designed to help you reach financial goals like starting your own business, retirement, having kids, buying a home, taking that dream trip, etc.). And, while you might think you need the fortune to invest, companies like Ellevest, allow you to get started with as little as $5.  After you create an account using an email address and password, you’re directed to the onboarding form where you fill in the basics like age, education, job, and salary. Next, Ellevest looks at savings contributions, salary projections, and other variables to give you advice on how to accomplish each goal.

Explained- How to Use Use Sallie Krawcheck's Investment Platform, Ellevest
PHOTO: Ellevest

Next, their crazy-fast proprietary algorithm gives an estimate of the monthly deposit and total amount you need to accomplish your specific goals. At any time, you can log back in and adjust your goals, timeline and goal priority based on these projections.

Once you’re done, you’ll have an investment portfolio that lists each goal and breaks down the different ETFs invested in. According to Smart Asset, the company next projects a 70% likelihood that the goal will be reached, compared to the 50% that other services estimate. When you get closer to reaching a goal, the investments get more conservative to minimize risk. It’s easy as 1,2, 3. Once you fund your account, you can begin investing.

For those new to investing, Ellevest offers a hands-off approach to investing, while still helping you work toward your goals in a way that’s best for you. And, because they’re a fiduciary, Ellevest automatically rebalances your portfolio to make sure you’re kept on track, despite market fluctuations. The best part? You can save your Ellevest financial plan, come back to it, modify it, or share it with your girlfriends and family, whether you invest with Ellevest or not. And, while many traditional advisors charge upwards of $1,000 for a financial plan. Ellevest is working to close the gender investing gap, so they charge nothing for theirs.  All it takes is $1 to make your first investment today. What are you waiting for?

“And, while you might think you need the fortune to invest, companies like Ellevest, allow you to get started with as little as $5.”

How Does “Goal-Based Investing” at Ellevest Work Exactly?


First, via a fun mad libs section on their website, Ellevest gathers information about you and your finances:  your age, career, income, and what you want to accomplish. After you enter your information, Ellevest looks at savings contributions, salary projections, and other variables to give you advice on how to accomplish each goal. Next, Ellevest’s crazy-fast proprietary algorithm gives an estimate of the monthly deposit and total amount you need to accomplish your specific goals. At any time, you can log back in and adjust your goals, timeline and goal priority based on these projections.

Once you’re done, you’ll have an investment portfolio that lists each goal and breaks down the different ETFs invested in. According to Smart Asset, the company next projects a 70% likelihood that the goal will be reached, compared to the 50% that other services estimate. When you get closer to reaching a goal, the investments get more conservative to minimize risk. It’s easy as 1,2, 3. Once you fund your account, you can begin investing. For those new to investing, Ellevest offers a hands-off approach to investing, while still helping you work toward your goals in a way that’s best for you. And, because they’re a fiduciary, Ellevest automatically rebalances your portfolio to make sure you’re kept on track, despite market fluctuations.

The best part? You can save your Ellevest financial plan, come back to it, modify it, or share it with your girlfriends and family, whether you invest with Ellevest or not. And, while many traditional advisors charge upwards of $1,000 for a financial plan. Ellevest is working to close the gender investing gap, so they charge nothing for theirs.  All it takes is $1 to make your first investment today. What are you waiting for?

The Money-Habit Every Millennial Woman Needs to Start Now
PHOTO: Ellevest

3. Establish an Emergency Fund


Don’t have spare change in case your car breaks down? Set up an emergency fund beforehand so that you have something to dip into when life goes awry. A good rule of thumb is to set aside three months worth of pay as a cushion. Having an emergency fund doesn’t mean you’re a pessimist, it simply means that you’re being smart and practical with your money. Future You will thank you for not making a stressful time even more stressful!

In case stashing the cash under your mattress isn’t cutting it, you can set up an emergency fund with Ellevest. Best of all, they offer super low-interest rates and don’t charge a management fee because they firmly believe in the importance of having an emergency fund. Get started here.

PHOTO: Ellevest

4. Contribute to Your 401(k)


Even if your dream retirement party is a long ways away from now, it’s never to early to start building up your 401(k). If you can at all possibly contribute the maximum $18,500 per year, you totally should. Why? Because not only does it decrease your taxable income (aka, the government can’t take as much money from you as it could), but if you contribute up to your employer match (if you have one), that means even more free money for you.

If you’ve switched jobs and are going bonkers trying to juggle all of your 401(k) rollovers, give yourself a break and roll over with Ellevest. Their dashboard will conveniently organize all of your retirement accounts in one place, even if your career has been all over the place.

Click here to create your free Investment Plan from Ellevest
PHOTO: Ellevest

5. Contribute to Your IRA


What’s the difference between a 401(k) and an IRA, you ask? Anyone can have an IRA, whether or not you have a 401(k) through work. There are two popular types of IRAs: a regular IRA and a Roth IRA. With a regular IRA, you can contribute up to $5,500 per year and you won’t be taxed on that money until you withdraw it. As you probably guessed, with a Roth IRA, you pay taxes on what you contribute upfront and don’t have to worry about paying taxes on that money ever again.

Like with 401(k)s, you can transfer your IRAs to Ellevest and start investing towards your dream retirement today. Who doesn’t like the sound of making a one-time investment and watching it grow (and keep growing)?

If you use your money smartly, this year’s tax refund will have lasting benefits for you. Best of all, it only takes 15 minutes to start a financial plan with Ellevest! What are you waiting for?

Click here to create your free Investment Plan from Ellevest
PHOTO: Ellevest

Want more financial advice? Follow us on Twitter.

Disclosures: We’re excited to be teaming up with the team at Ellevest to start this conversation about women and money. We may receive compensation if you become an Ellevest client. 

DISCOVER:

2018 goals, career, ellevest, expert advice, future you, go getter, how to save for retirement, investing for women, money, money tips, saving for retirement, tax return

Show Comments