I don't have time to deal with managing investments. To each their own.
Taxes
- Thread starter Cycloneman24
- Start date
I don't have time to deal with managing investments. To each their own.
If you think your initial response helped clarify the issue for the OP, then more power to ya. Again, the OP never suggested it wasn't a personal choice. They were trying to understand why one might choose one vs the other.
Like I said, that’s what makes it personal preference. There is no correct answer. If you think there is, you don’t understand how different people are. For some it’s and easy spot to invest it. For some, it’s an easy spot to not spend it throughout the year. It’s a personal preference based on each individual - which is why I answered it that way. What’s right for you isn’t always the same for the next person.
The OP just wanted to know the best option though and there is no single best option.
It still comes down to how much time and effort you want to put into getting that amount of "cash ahead."
You've keep repeating yourself and haven't yet managed to refute anything I've said. "Help" isn't exaggerating one's performance in order to impress people, it's giving honest answers to people who need them.
TurboTax's running calculator had me owing a whopping $8.00 until I input my student loan interest amount and now I'll be getting a refund of $300. Both figures are closer to "$0.00" than I've ever been.
NSIS because sarcasm doesn't translate well on social media, but if so, you could have invested $1200/month starting in January and had even more at the end of the year
This is pretty absolutist. You all know I'm obsessed with talking about money, financial planning, and investing. And I still like getting my money back every spring. Are you saying I'm financially illiterate?
I don’t make enough money to stress about giving the IRS the interest, but also make enough to not worry about the interest, I guess.
I"ll say it again. A dollar paid to you today is worth more then one paid to you at a later date.
There's definitely something to the psychology of getting a windfall once a year.
Worked with a guy who always bragged about getting a refund, but that was what he wanted. He would always use it to do a spring project on his house.
I save or invest whatever's left over each month, so personally I'm fine not getting a huge refund, but I can see the appeal for some.
Worked with a guy who always bragged about getting a refund, but that was what he wanted. He would always use it to do a spring project on his house.
I save or invest whatever's left over each month, so personally I'm fine not getting a huge refund, but I can see the appeal for some.
There's the mathematically correct answer, and there's the behavioral economics answer.
It's obviously mathematically true that you can earn more by holding on to your money during the year and investing it, then paying taxes at the end of the year. This is the most efficient use of your money - though it also has to be said that the only way to guarantee this happens is to invest conservatively, because nobody can predict the market.
It's also true that behaviorally a lot of people can not or will not invest any extra money they get, or lack the skills or interest to manage it. Or, as others have said, they just like the feeling of getting a return. That is mathematically inefficient, but is probably better for them in the long run because the alternative is even worse.
Dave Ramsey has made a mint on this distinction.
It's obviously mathematically true that you can earn more by holding on to your money during the year and investing it, then paying taxes at the end of the year. This is the most efficient use of your money - though it also has to be said that the only way to guarantee this happens is to invest conservatively, because nobody can predict the market.
It's also true that behaviorally a lot of people can not or will not invest any extra money they get, or lack the skills or interest to manage it. Or, as others have said, they just like the feeling of getting a return. That is mathematically inefficient, but is probably better for them in the long run because the alternative is even worse.
Dave Ramsey has made a mint on this distinction.
Wow I didn’t think this would receive this many responses. Thank you to all for the information. I got the information I was looking for.
Then, if getting a refund is "letting the govt borrow your money interest free", everyone should attempt to pay as large of a tax bill they can each year so the govt is essentially loaning you money interest free. That is the "prudent" thing to do.
