How to invest your tax refund

President Obama has announced a stimulus plan and we can expect bigger tax refund than before.  But given the economic uncertainiites, everyone is wondering what to do with their money.  Below are some ideas on how to make the best use of your tax refund:

1. Open a Money Market Account: Ideally you should have up to six months of cash reserves.  If you do not have that, then you should consider opening a money market account and put this money as a cash reserve.  Sure, media would ask you to spend it but do not listen since they won't come to bail you out if you need cash.
2. Pay off your Debt:  If you have cash reserves then you should consider paying off your credit car bills or other loans.
3. Open an IRA:  If you do not have a retirement account through your employer consider opening an IRA where you can contribute up to $5,000 per year and grow your money tax free until you start withdrawing.
4. Open A 529 Plan:  If you or your child are planning to attend college you can use this money to fund that education by opening a 529 plan.  Not only you can get a tax deduction on your contribution but also you can grow it and withdraw it tax free.  You can learn more about 529 plan for your state by going to CollegeGenie.com
5. Invest in Real Estate:  Home prices are rock bottom and you can easily get a loan especially if you are the first time home buyer. 
6. Invest in the Stock Market: Stock market is back to the levels it was in 1997.  You can buy some great companies with strong balance sheet for really low. 
7. Buy Gold: Gold prices are expected to rise in the long term.  You can buy real gold, gold coins or invest via an ETF/ Stock Fund whose ticker is GLD.  GLD buys and stores the gold bullion for you.