How Much You’d Have Now If You Invested Your Tax Refund in Apple Stock in 2023
Written by
John Csiszar
Edited by
Chris Cluff
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Apple stock has been a Wall Street darling in recent years, jumping 276% in the last five years alone and occupying the No. 2 spot in the S&P 500, based on market capitalization.
Although it has had its share of ups and downs over the past year — and hasn’t even kept up with the market overall — putting your tax refund into Apple stock in 2023 would have proven to be a pretty solid idea.
But, is it really a good idea to put your tax refund into investments? And should you do the same thing with your 2024 refund? Here’s a look at the financial reasons behind investing your tax refund into an investment like Apple.
Also see what you would have made if you had invested your tax refund in Amazon.
Should You Invest Your Tax Refund?
A tax refund isn’t what many people make it out to be. Although it certainly feels great to get a check from the government every year, it’s not as if the IRS just hands out “bonuses” to Americans every April. A tax refund, as the name actually suggests, is just a return of money that you overpaid in taxes during the prior year.
Taking that one step further, what you’re actually doing is loaning the government your money to use as it sees fit throughout the year before they return it to you, all without paying you a dime in interest. For this reason, most tax advisors actually recommend that you structure your finances so you don’t get a refund every year.
But if you still like the idea of getting a tax refund, there’s something much more productive you can do with it than simply blowing it on a vacation or a new wardrobe — and that’s to invest it.
Many financial advisors recommend investing any type of “found” or “free” money, as it’s money that you aren’t expecting outside of your everyday budget. This is a great way to pump up your investment accounts or even your emergency fund without feeling as if it’s actually coming out of your own pocket. Buying stocks like Apple can be another good option.
How Did Apple Stock Perform Over the Past Year?
Although Apple has been a spectacular performer over its lifespan, the stock lagged the overall market quite a bit over the past year. As of March 13, Apple had returned 11.86% — still an impressive return.
According to the IRS, the average tax return for tax year 2022 was $3,167. If you had invested that amount into Apple stock as of one year ago, you’d be sitting on an investment worth $3,636 today.
What Are Analyst Projections for Apple?
The 30 analysts covering Apple have a consensus “strong buy” rating on the stock. The average 12-month price target is $204.86. Based on Apple’s closing price of $171.13 on March 13, that suggests a one-year upside of about 18%.
How Do Tax Refunds for 2024 Compare With Those Received in 2023?
As of March 1, the IRS reported that the average tax refund is $3,128, up slightly over 2023. If you invest that amount into Apple stock and it returns what analysts project over the next year, you could be sitting on about $3,691.
What Are Other Investment Options for a Tax Refund?
While Apple seems to have a bright future ahead, it’s not the only option you might consider for your tax refund. If your entire portfolio is already in tech stocks, for example, adding Apple won’t diversify your portfolio much.
If you’re just starting out, owning Apple as your only investment might be too risky, as its ups and downs might be too much to stomach. And if you simply don’t want to do all the research, you might just consider a low-cost, S&P 500 index fund. That’s what billionaire investor Warren Buffett has said is the option that “makes the most sense practically all of the time” for the average investor.
Is Apple the Best Investment Choice for You in 2024?
While Apple’s gain over the past year was significant, the S&P 500 posted a gain of almost 33%, more than double that of Apple. Whether that means Apple is slowing relative to the S&P 500 or it presents a buying opportunity is up to your individual determination as an investor.
Analysts suggest an 18% upside in the next year, almost double the long-term average of the overall market; so, if that prediction pans out, Apple could be a great investment for your tax refund. However, it’s important to make sure that Apple meets your investment objectives and personal risk tolerance as an investor.
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