By the Superfitdad

It’s the end of the Australian financial year which means, for those who have incurred personal expenses in the course of their business, it’s tax return season and, ideally, tax refund season.

Much like the truffle season in Alba or the Indian wedding season for Gold prices, this can mean a flurry of expectant spending or, at the very least, plotting about what spending might ensue, assuming things work out favourably.

And irrespective of whether you have a tax refund in the offing, any time you have a lump sum coming your way, it’s a great opportunity to start building or growing your asset base.

So, in no particular order, here are some things to consider.

1. Clear Debts (Especially Credit Card)

You might think: so what? A measly $1k on the credit card. No need to worry about that. Let’s buy some shares or a holiday or some fun – pick your poison!

NO. Not on your nelly, my friend. The reason? Unless you have an interest-free card or have transferred a balance, you’ll be paying 15-25% on the credit card debt. All your other investments will NOT be paying you anywhere near this much. At least on a consistent basis.

2. Pay Down Mortgage / Save For A Mortgage

Paying down your mortgage might not seem sexy. In fact, there an entire industry geared around enticing you to do other things with you money. Ignore them, though, and seriously consider paying down your home loan.

But being mortgage-free, early, is a pretty cool thought. If you don’t have own property yet, start thinking how you can accelerate the process.

3. Invest In Yourself

How many new skills have your learned since you were 25? For many of us it’s hard enough mastering the meagre skills we’ve been given or acquired so far. But investing in ourselves and our future by cultivating our skill-set or talent stack is probably the most important investment we can make.

To a certain extent, it doesn’t even matter what you’re learning. Whether it’s learning a foreign language, taking a course on public speaking, learning to write code, the key thing is to be challenging and stimulating ourselves to develop and grow. Do this and, almost by osmosis, your performance in all areas will soar.

4. Top Up Your Superannuation / Pension Fund

Propping up your pension with an after-tax lump sum isn’t as attractive as chucking in pre-tax and reaping the tax benefits offered by salary sacrificing, say.

And, it’s not really sexy.

BUT…

Don’t you want to have a comfortable retirement, especially given that there’s no telling how long we might live nowadays? Also, once you’ve tucked it away in your pension, it’s there for a very long time, giving it a very love-you-long-time cogitation period. Which, in plain English, means it’s got plenty of time to grow and accumulate.

5. Become An Owner

Feeling emboldened now that you’re newly flush? Hit the markets. Not the Farmer’s Markets, silly. The Stock Markets. A good way to get some exposure to the markets and become an owner (in a very tiny way, of course) of some of the world’s biggest and best companies is via index funds.

Index funds are popular because they don’t carry the same kind of costs associated with actively managed funds. [Question: have you ever met a poor fund manager? No, me neither. It’s because your fees are paying for the Jag, the Rolex and their kid’s school fees.]

Not only are index funds cheaper than managed funds – often by 1-2.5% per year – they routinely outperform the funds with managers. Strange, huh? So if you’re looking for a proven way to create and grow wealth over a long time-frame (10+ years), the stock markets and index-linked funds tread a proven path.

Or you could…

6. Buy Individual Stocks

Not for the faint-hearted, this can be an exciting ride.

If you get a tip from a mate about a firm that makes mining valves and supplies a firm who’ve just found a massive unknown copper deposit somewhere in the middle of Whup-Whup, well, you could be quids in.

You’re unlikely to get any information before hundreds and thousands of others have that same information. That hot tip your mate gave you has been through brokers and dealers and market-makers. People will be all over it.

The golden rule, though: always tick the box to have your dividends invested. Never deviate from this and you should be okay [assuming your stock pays a dividend].

7. Give It Away

Percentage of people ticking this option: a big fat zero [I’d love to be proved wrong here, by the way]. But imagine how good it would make you feel.

To help those less fortunate in a meaningful way. How absolutely magnificent.

GIVE WELL ranks charities according to how effective they are with their donations. This means you can give to charities that have the least waste and give the most to the intended beneficiaries. At the very least consider making a monthly donation via direct debit to one of the Give Well top-rankers.

8. Travel

They say nothing broadens the mind like travel.

Which is tricky because if you’re a new-ish parent, the idea of transporting your chaotic sleep-deprived existence to somewhere unfamiliar where you don’t know the name of the barista or the nearest 24 hour petrol station for the late-night banana dash. But whether you’re encumbered by kids or not, it’s never that bad.

It’s actually wonderful. The whole family seem to recognise the importance of the trip and improve their behaviour tenfold.

9. Buy Art

If none of the options listed before appeal, then there are a couple of other options to consider.

I select them because they have the potential to be appreciating assets.

If you can cultivate an appreciation of art, I think it can be useful. Finding something (as in, a piece of art) that resonates with you and can calm you when seas get stormy can be a real comfort.

10. Buy Jewellery

This is basically: a watch.

As we’ve seen there are a myriad of options and we’re in danger of suffering from a Paradox Of Choice when it comes to using our tax refund wisely.

There are other things I couldda and shouldda mentioned – But, in the interests of expedience, we’ll leave it there for now.

At the very least, buy something that will appreciate and grow or will help you or someone else appreciate and grow. As long as you do that, you’ll be winning.

By the Superfitdad