cryptocurrency
Dollar Cost Averaging, Explained
Dollar cost averaging is a basic investment strategy where you buy a fixed dollar amount of an investment on a regular cadence (e.g. weekly or monthly). The goal is not to invest when prices are high or low, but rather to keep your investment steady, and thereby avoid the temptation to time the market. Thatâs […]
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Complete Guide to How Credit Cards Work
There are over 300 million credit card accounts in the United States alone, and itâs estimated that 79% of consumers have at least one credit card or charge card. Yet, many people donât have a firm grasp on the basics of what a credit card is and how credit cards work. If you have a […]
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The Average 401(k) Balance by Age
A 401(k) can be a valuable part of a retirement savings plan. But how much should you have saved in your 401k at different ages, or even stages of your career? Charting the average 401k balance by age can help put your own savings in perspective. Seeing what others are saving in their 20s, 30s, […]
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What Is Cryptography and How Does It Work?
Cryptography is a science that has evolved over time since the ancient Egyptians used it to communicate. Today, it takes many forms, with quantum computer scientists just one group who uses this coded system. Throughout history and into the digital age, the purpose of cryptography has remained the same: It is a means to transmit […]
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Why Your Tax Refund Could Be Bigger This Year
At a time when many Americans are paying more for everything from gas to ground beef, tax refunds will provide much-needed cash for many families. And this year, those refunds could be particularly generous.
- SEE MORE Where’s My Refund? How to Track Your Tax Refund Status
Through the March 4, the average federal tax refund was $3,401, up 13.7% from the same period last year, according to the IRS. In 2021, the average refund was $2,815.
People who expect a big refund tend to file early, so the average for the 2022 tax season may be lower. Still, there are several reasons many taxpayers could get a larger refund this year. Taxpayers who were eligible for a third Economic Impact Payment and didn’t receive a check, or received less than the full amount, will have the opportunity to claim the recovery rebate credit when they file their 2021 tax return. The credit is worth up to $1,400. Likewise, taxpayers who were eligible for the expanded child tax credit, worth up to $3,600 in 2021, will have an opportunity to claim it when they file their 2021 tax return.
The IRS sent out advance child tax credits in six monthly payments last year, but not everyone who was eligible for the payments received them. If you had a newborn last year, for example, you didn’t receive the advance credits because the IRS didn’t have a record of the addition to your family. But when you file your 2021 tax return, you’ll be able to claim the credit.
Young adults may also receive a larger-than-expected refund this year because of a provision in the American Rescue Plan that expanded the earned income tax credit, which is designed to help low- and moderate-income workers. The legislation expanded eligibility for the credit to include workers between age 19 and 24 who don’t have children.
Investing Your Tax Refund
Nearly 60% of taxpayers expect to receive a refund this year. If you’re interested in investing all or part of your money, many brokerage firms will allow you to open an account for less than $500, and some have no minimum requirements. Coinbase, an online platform for cryptocurrency investors, says taxpayers who file their returns using TurboTax can have their refunds converted into Bitcoin, Ethereum or one of the other cryptocurrencies the company supports.
- SEE MORE 17 Bitcoin ETFs and Cryptocurrency Funds You Should Know
Cryptocurrencies are extremely volatile. Risk-averse investors may want to invest their refunds in Series I bonds. I bonds issued from November 2021 through April 2022 yield a composite rate of 7.12%. You can buy up to $10,000 each year in electronic I bonds and apply your tax refund to purchase up to $5,000 in paper bonds.
Finally, although it’s nice to get a check from the IRS, there are more-effective ways to use your money than giving the government an interest-free loan. The IRS offers a tool on its website that you can use to adjust your withholding.
- SEE MORE 10 Things Every Worker Needs to Know About the W-4 Form
Capital Appreciation on Investments
For many people, the goal of investing in assets like stocks or real estate is to see the price of the investment go up. The objective is to buy at a relatively low price and hope the asset’s value goes up over time. Though it may be easier said than done, this strategy — called […]
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Free Margin Defined & Explained
Free margin is equity in a traderâs account not reserved for margin or open positions, which can be used to open new trades. Free margin is also the amount your existing holdings can move against you before you face a margin call. Changes in market values can impact this important margin balance when trading foreign […]
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What Is a Dividend?
A dividend is when a company periodically gives its shareholders a payment in cash, additional shares of stock, or property. The size of that dividend payment depends on the companyâs dividend yield and how many shares you own. Not all companies pay dividends, but many investors look to buy stock in companies that pay them […]
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