Use Your Tax Refund for Low Fee Index Investing This Year
If you have an interest in watching your money grow, you should know that using your tax refund for low fee index investing this year is a positive and productive strategy. In taking this step, you will discover that your investment dollars will result in a profit and out-perform the majority of the mutual funds that are managed, for the long-term. Throughout history, many investors have suggested utilizing this strategy. One of the most popular, Warren Buffet, has expressed that those that who have the inability to evaluate individual stocks on the market should take their money and invest it in a low fee index investing strategy. Instead of spending the money you receive with your tax refund, you should always strive to invest it. In doing so, your refund dollars will grow, which will result in your ability to reap large financial rewards, over time.
There are several distinct advantages associated with investing in low fee index investing. By knowing these benefits, you are sure to see why this type of investment is considered to be both positive and productive:
- Low fee index investing does not require a comprehensive understanding or detailed knowledge of financial theories associated with investments, accounting methods, or the policies surrounding the acquisition and construction of a financial portfolio.
- Low fee index investing funds have virtually no expense ratios, which assists in providing a significant and highly competitive edge over managed funds and aids in ensuring that the funds experience superior performance on a long-term basis.
- These types of low fee funds are created by a multitude of companies. As a result of this fact, they are considered to be highly diversified. The diversification effectively reduces the company risks that are often observed with individual stocks.
The Low Fee Index Investing Fund – At a Glance
If you have an interest in using your tax refund dollars for investment purposes, it is imperative that you learn what a low fee index investing fund is and how it works. Essentially, this is a type of mutual fund that is designed to reflect the performance associated with one of the major markets – such as the Industrial Average of the Dow Jones and the S&P 500. While mutual funds are typically managed in a highly active manner and evaluated and analyzed on a regular basis, index funds only require passive management. The stocks that make up the index fund rarely change. If changes do occur, they are only minimal, in nature. These funds are considered to be appropriate for those that do not know or what to go through evaluating the competitive-based advantages of corporations, understand how to differentiate income statements and balance sheets, or properly calculate cash flows that have been discounted. By using your tax refund dollars to invest in a low fee index investing fund, you have the unique ability to obtain hundreds of different stocks without having to pay a massive amount of commissions to a broker.
By investing $1,000.00 of your tax refund dollars into a low fee index investing fund and then investing as little as 15% of your total income into the fund over a period of 15 years, you could more than triple your earnings from your original investments. There are several distinct ways to make your dollars work for you when it comes to index funds. When opting for this type of investment, it is best to place a large portion of the money into your investment, initially, and then to make regular deposits from your overall income on a monthly basis. In taking these steps, you are sure to experience the highest rate of return on your tax refund. While it may feel good to take your tax refund and spend it on leisure-related items, it is best to invest in low fee index investing funds. This way, you can watch as your money makes you more money.