The money tree

You’re finally finishing that 1040 and, well, you’re ready for ten aspirin and a 40 of Old English. But remember: The end of tax season’s also refund time, which means it’s time to blow your windfall on a weekend in a BMW or a trip to Lake Geneva. Either way, it’s free money, right? Not exactly. “It’s not money to blow,” says Carson Booras, a financial adviser at Charles Schwab. “It’s your money that you’re getting back. It’s the ideal time to park it.”

Booras and other advisers are, of course, more into saving than spending, but since it’s money you worked for, you might as well make it work for you. With the right plan, the cash you’d spend on two days in a rented Bimmer could grow into a good chunk of a two-year car lease in a few years, and that weekend in Geneva could be a down payment on your own lakefront property in a decade. Or, you could look longer term.

“Saving for retirement is one of the most important wealth-accumulation goals, and it’s all about starting early,” says Paul Peterson, a Fidelity branch manager. “If a 25-year-old puts in $4,000 today and leaves it in an IRA for 35 years, they’ll have over $42,000.”

Easier said than done, right? Actually, it isn’t hard to get started.

What to do with...$100
A C-note doesn’t seem like a lot of dough, but that doesn’t mean you can’t start saving small. Don’t just go grandma and shove it in a CD—consider an online savings account instead.

“With interest rates the way they are right now, there is little difference between a CD or a money-market account,” Booras says. “You can get 4.5 to 5 percent return [on a money-market account], and it’s low-risk income that’s liquid.”

If a savings account’s too safe for your tastes—or you’ve been itching to play the market since playing LIFE—a Benjamin can get you on board, especially if you’re willing to be patient. “Index funds are very reasonable,” says John Schmitt, an adviser at Merrill Lynch, referring to funds that offer you a bit of every company in a given market. For example, the popular S&P 500 index fund rises and falls each year, but grows over the long term.

What to do with... $500
If you’re looking to turn $500 into a bigger sum—and you’re willing to be patient—you can afford to be a little more aggressive.

Shane Chareonchump, an adviser at Lincoln Financial, says that growth-in-income funds are a good way to enter the market. “[They] offer a 60-40 split between equities and bonds that are good at growing income,” he says. In a given fund, the percentage of stocks  determines the risk factor. More stock means more risk, but it also could mean more money: “Those funds have had a growth of 8 to 10 percent over the last few years,” he adds.

If you want quick growth that’s a little less risky, Booras says, an ultra short-term fund is a good fit. It’s a mutual fund that matures in one year or less. The fund’s completely liquid, and nearly mature bonds pay off soon. “You can actually collect interest payments monthly on this fund,”he says.

What to do with... $750+
That’s some serious scratch, Richie Rich. You could use it to pay extra on that condo you bought last year, but saving it could be a wiser tax move.

“If you own a home, you sometimes have a tax incentive to put the money in a CD rather than paying off mortgage interest,” says Jack Forde, a certified public accountant. In such cases, you’ll earn a return on your investment—whereas the write-off for the mortgage interest merely saves you money (and once you’ve written the check, your money’s no longer liquid).

If you don’t already have your own digs, $750 can be a good start on a down payment or a jump on a big fat portfolio. But you’ve got to commit, Booras says. “The best way to save for a house, a car, a CD player, is to create a habit of saving,” he says. “Onetime dump-ins are great. But if you can put a little bit away consistently, that’s the best way to do things.”