How Will You Spend Your Next Stimulus Check?
Although they are less than the $2,000 many were hoping for, the current round of stimulus checks still offer a $600 jolt to help recipients pay for the basics—or to invest in the future. Designed to help individuals and families weather pandemic-related financial challenges, checks are rolling out for eligible taxpayers to use as they choose.
Many young investors who are in school or who are able to cover rent, food and utility bills are vowing to turn their stimulus checks into something bigger, seizing on the 2020 trend of micro-investments and micro-cap stocks. TikTok and YouTube videos alike offer inspiration for newer investors on how to turn that initial $600 into a four-figure investment. Savvy investors of all ages recognize that $600 might not morph into millions overnight, but that small savings and investments now can lead to an early retirement down the road.
The second round of stimulus
After much debate, Congress recently approved a second round of stimulus that allots $600 for individuals with an adjusted gross income of less than $75,000—$150,000 for married couples who file jointly—and an additional $600 for each dependent child. In addition, unemployed applicants will receive an extra $300 in weekly benefits for at least 10 weeks through Mid-March. Applicants can track the status of their check on the IRS website.
After the previous round of 2020 stimulus checks was distributed, studies found that about one-third of the funds were used for savings or investments. Since the checks are issued based on income, rather than employment status, and many restrictions remain in place across the United States, economists expect similar trends this time.
Round one to Robinhood
Following the March 2020 CARES Act stimulus checks, discount online brokerages such as Robinhood noted a correlation in new investors. A pioneer in offering commission-free trading cryptocurrency trading, Robinhood reported spikes in March when the stimulus was passed and again in June when the checks arrived.
Younger investors are also sharing a greater willingness to dabble in cryptocurrency, to trade fractional shares and to pursue new investment options with the funds from their stimulus checks.
To that end, Investors Prism’s PRISM stock indexes track small- and micro-cap companies across a spectrum of innovative industries, including life sciences, medical devices, diagnostics, genomics, biotech and the digital economy, offering opportunities for a wide range of investors.
A reward for the new year
Finally, some individuals and families are using the second round of stimulus checks for a splurge, determining that they deserve a reward for battling the challenges of working and studying at home as well as healthcare, employment and isolation issues lingering from 2020. Stimulating the economy in their own way, these recipients are using the funds for future travel, fun and small luxuries.
The good news is that the checks come with no strings attached, allowing recipients to determine whether they will pay down debt, pay for a month’s worth of groceries or pay it forward with an investment.