6 Green Ways to Invest Your Income Tax Refund

A flower made of hundred dollar bills

 Jupiter Images

Whether you filed your taxes early or are scrambling at the last minute, it's not a bad idea to start planning what to do with your tax refund. Sure, you could blow it on Xbox games and vintage vacuum cleaners again this year, but the smarter idea would be to put your money to work. The traditional play is to put the money wherever it makes the highest return, but these days there are other options available to those who want to do good with their money while doing well.

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Green Mutual Fund

AJ Brustein/Flickr.

If you're looking at a nice fat return (at least $250) and just want to sock your money away in a place where it will grow, you might want to look at greener investing, aka socially responsible investing. Socially responsible investing, or SRI, is the act of investing your money in places where it does some good for the world in addition to gaining you a return. Corporations that get SRI investment dollars are the ones that work to minimize their environmental impact while taking care of their employees, their customers and the communities they impact.

You'll want to talk to a financial adviser to select the investment to buy into, but Pax World Mutual Funds, Calvert Investments, and Domini Social Investments are all respected in their field and good places to start.

Note: I am a decent ultimate Frisbee player and a pretty good green blogger. I am not an investment adviser. Before you decide to invest your money in any actual stocks, funds, or other financial instruments make sure you talk to an actual licensed investment adviser. The Social Investment Forum is another good place to begin your research.

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Solar panels

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Modern-day solar panels offer around a 15-year payback on your investment, though with the right rebates and tax breaks that time can easily be cut in half. At those rates buying solar panels makes as much sense as buying into a low-risk mutual fund. If you make your money back in 10 years, then you're looking at pure profit every year after that. There's no difference between a dollar that's put into your bank account and a dollar that you don't have to pay out on your electric bill.

You can easily spend five or even six figures on solar panels for your home, but there are also options at closer to the three-figure range. Home Depot sells a 246-watt kit for just $1,400, a smaller 160-watt kit is just $950 and an 80-watt kit just $500. These smaller kits won't power your entire house, but they will cut down on the amount of energy you're drawing from the grid and would be great to power something like a small camp or backyard office.

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Energy efficiency

Energy Circle.

Saving money is just as good as making money, as far as your bank balance is concerned. Investing your tax return on boosting your energy efficiency is a smart way to both reduce your environmental footprint and to cut down on your monthly bills. There are a lot of ways that you can boost how efficiently you use energy (augmenting your home’s insulation, installing more efficient windows, finding and sealing gaps around the foundation), and some are even fun and cool to use (energy monitors, programmable thermostats, foam guns).

My friends at Energy Circle are a great place to look for both energy-efficient products and information. They understand that it can be a complicated task to sort through the options in the world of energy efficiency, and they've worked hard to be as strong on education as they are commerce.

For a little under $50 you can pick up a Kill A Watt EZ Electricity Monitor, while the top-of-the-line "world's first comprehensive circuit-by-circuit home energy monitor and management system" runs $689. A BITS Smart Strip Power Strip is super affordable at $28, and three crank-powered emergency flashlights are just under $90.

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Helping other people

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Sometimes it's OK to forgo financial gains if you can use your money to help make the world a better place. Energy in Common is Kiva with a green twist — all the projects they offer up for investment are for renewable energy systems in the developing world. Last year I invested $25 in Edna Mganga, a restaurateur in Dar es Salaam, Tanzania, who used my capital and the capital of other micro-investors to buy a solar panel system for her restaurant. Her $1,085 loan will be paid back in 12 months and will fund a solar system big enough to prevent 1 metric ton of CO2 from being produced each year.

What the deal lacks in interest (like Kiva, loans made via Energy in Common are paid back at 0 percent interest) it more than makes up for in feel-good. It's a great tool to help people like Edna Mganga reduce their energy bills while knocking out a small portion of the dirty electricity needed to fully power the grid in Dar es Salaam.

You can peruse the list of loans looking for investors at Energy in Common here. Making a loan is quick and easy and a good place for your tax return.

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Chickens

kusine/Flickr.

Chickens! Using your tax return to invest in chickens is not only a good way to spend your money but also a well timed venture, what with summer being right around the corner. While it's certainly possible to spend a lot of money getting into raising chickens, it's just as easy to do it for cheap. If you're halfway handy with a hammer you can use plans from the Internet to build a backyard coop using scavenged materials, and the birds themselves can be purchased for just a few dollars each. Once they've grown out of being chicks they'll find part of their own meal in your yard, serving double duty as eliminators of bugs. You can serve them kitchen scraps to help cut down further on your feed bills and laugh your way all the way to the egg bank.

OK, so maybe you won't save all that much money by not having to buy your eggs, but with a little hustle you could earn some extra scratch by selling your leftover eggs to neighbors who would be crowing with excitement over their farm-fresh omelets. Chickens also create great compost that you can use to boost your gardens, helping to further cut down on your food bill.

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Composting worms

Mely-o/Flickr.

Composting worms, like chickens, probably won't make you rich, but they are a cheap, fun and easy way to cut down on your monthly (garbage) bills. A well-established colony of red wiggler or European nightcrawlers, the two most common types of composting worms, can eat their own weight in food waste every day. Your garbage won't smell (there won't be anything in there to stink it up), the lighter bags will be easy to carry to the curb on trash day, and every month or two you can harvest the worm poop to use as plant fertilizer. It's hard to find better fertilizer than worm poop.

You can make a worm bin out of cheap storage bins or spend $100 or so on a custom-made setup, which often comes with stackable trays and liquid collecting tanks. A well-kept worm bin won't smell and can be kept under the sink or in the corner of the kitchen.

Red Worm Composting is a great place to get started with worms. They sell both kinds of composting worms as well as bins and books on the best ways to take care of your little wigglers.