5 Ways To Turn Your Tax Refund Into an Investment, From a Financial Advisor
Millions of Americans receive tax refunds every year. The Internal Revenue Service reported that roughly 104 million taxpayers received refunds in 2025, with an average tax refund amount of $3,167. For most people, that's a meaningful chunk of money. What are you planning to do with the refund? Most people spend it, but some choose to invest it.
MoneyLion spoke to Alonso Rodriguez Segarra, a financial advisor and CEO at Advise Financial, who shared the five best ways to turn your tax refund into an investment.
Learn More: What Americans Do With Their Tax Refunds
Read Next: Start Growing Your Net Worth With Smarter Tracking
Pay Off High-Interest Debt
Before you think about boosting your emergency fund or retirement contributions, look at the debt you’re carrying. High-interest debt, especially credit cards, can quietly drain your finances. According to the Federal Reserve, the average interest rate on credit cards as of November 2025 was 22.3%. No investment will give you such a return -- not stocks, real estate or high-yield savings accounts.
Segarra relates this to what legendary investor Warren Buffett said in one of his annual shareholders meetings: “If I owed any money at 18%, the first thing I'd do with any money I had would be to pay it off.” This includes credit card debt.
“According to Buffett, paying off such debt is, in fact, the best investment one can make,” Segarra said.
Boost Your Retirement Contributions
“If running out of money during retirement keeps you up at night or you have fallen a bit behind on this goal, you can use this extra money you’re receiving to make additional contributions to your 401(k) or individual retirement account (IRA),” Segarra suggested.
Whatever the amount is, contributing more money to your 401(k) or IRA gives your retirement savings more time to grow through compounding. Over time, this small boost can make a meaningful difference.
"Be careful not to exceed the 2026 annual contribution limits," Segarra added.
Invest In Yourself
This is one of the most underrated investments you can ever make, especially now with artificial intelligence (AI).
“Everywhere we look (whether reading or listening), we hear that AI is going to take our jobs and that, in the future, the work we currently do may no longer be necessary,” Segarra said.
Instead of contemplating what will happen, invest in skills that will not only make you stand out in your industry as AI advances but also help you earn more. As Segarra said, “Consider investing in the knowledge needed to master these tools or learn skills less likely to be impacted by AI in the future.”
Max Out Your HSA
If you have a health savings account (HSA), consider maxing it out with your tax refund. For 2026, individuals can contribute up to $4,400, families up to $8,750. Plus, HSA is the only account that offers a triple tax advantage -- contributions are pre-tax, growth is tax-free and withdrawals for qualified medical expenses aren’t taxed. But the real advantage comes from leaving the funds to grow untouched.
“Try to avoid withdrawing money from this account,” Segarra said. “Instead, use out-of-pocket funds from other accounts for your expenses.”
The longer you let it grow untouched, the more time compounding works in your favor.
Reduce Financial Pressure
You shouldn’t optimize every dollar of your tax refund for a maximum return. Sometimes, the best investment is your peace of mind.
"Personal finance is more ‘personal’ than it is ‘finance.’ So, if you feel the need to go out with your spouse, your children or even just by yourself to enjoy a small luxury, don't feel too guilty," Segarra said.
As you give yourself that small treat, doing it in a responsible way can help reduce financial stress and “remind you that improving your finances is the path to achieving the life you desire.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
More From MoneyLion: