Your Tax Refund Will Probably Be Bigger This Year. Here's What to Do With It.

<p>Due to the "big, beautiful bill" passed last year, many taxpayers can expect a larger refund from the Internal Revenue Service this tax season. That's because the bill reduced individual taxes by $129 billion for 2025. But many Americans didn't change their withholding for the year, so they'll get back the extra amounts withheld from their paychecks in their tax returns.</p>
<p>As of late February, the average refund is a bit more than 10% higher so far this year, pushing the average refund amount for individual filers from around $3,450 to more than $3,800. Unless you have urgent spending needs or you can pay down expensive debt, the wisest thing to do with that refund is to invest it and give your retirement portfolio a bit of a shot in the arm.</p>
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<p>But in such uncertain times, when the war in the Middle East is pushing major stock indexes down and driving market volatility higher -- with no clear end to the conflict in sight -- it's difficult to know where to invest.</p>
<h2>Certain sectors are less impacted by volatility or economic slowdowns</h2>
<p>Fortunately, there are prudent investments that should outperform other assets in volatile or down markets. And if you look at a heat map of the S&amp;P 500, you can see that many of these stocks are already outperforming the broader market over the past month as the war has ground on.</p>
<p>First of all, consider stocks of companies that provide essential goods that people won't stop buying even if the economy stagnates or inflation rises. The <a href="https://www.fool.com/research/largest-consumer-staples-companies/?utm_source=yahoo-host-full&amp;utm_medium=feed&amp;utm_campaign=article&amp;referring_guid=d0f4dc05-1d11-48eb-9ee1-963ddd21584f">consumer staples sector</a> includes discount retailers like Costco Wholesale (NASDAQ: COST), Target (NYSE: TGT), and Walmart (NASDAQ: WMT). People will continue to shop at these low-cost chains even when the economy falters. Even better, higher-income consumers looking to cut costs in tough times will increase their visits to these stores.</p>
<p><a href="https://www.fool.com/investing/stock-market/market-sectors/healthcare/?utm_source=yahoo-host-full&amp;utm_medium=feed&amp;utm_campaign=article&amp;referring_guid=d0f4dc05-1d11-48eb-9ee1-963ddd21584f">Healthcare</a> is another great defensive sector. I like Johnson &amp; Johnson (NYSE: JNJ) and CVS (NYSE: CVS) -- they provide essential medical supplies or services that people will need in good times and bad. Healthcare is not a luxury.</p>
<p>And utilities are always a great bet if you think the market and/or economy is about to turn downward, as they provide essential services that don't see a decline in demand in recessions. Three top utilities to consider are American Water Works (NYSE: AWK), a water utility; Brookfield Infrastructure (NYSE: BIPC), a gas utility; and NextEra Energy (NYSE: NEE), an electric utility.</p>