Stimulus checks have begun to appear in the mailboxes and bank accounts of most people throughout the country. Thanks to a stimulus package passed right before the end of 2020, $600 will be given to every adult who earns less than $75,000 a year (or $150,000 for married couples). Families with children under 17 will also receive $600 per child.
For all who were fortunate enough to have maintained your financial stability throughout the COVID-19 pandemic, the stimulus payment presents an opportunity for you to get started with investing. To offer some guidance, we put together four ideas for you to consider for investing your $600 stimulus.
1. Start saving for retirement.
Especially for gig and contract workers, saving for retirement can be tough. Without an employer contributing to a 401k, many contract workers find saving for retirement on their own daunting. But, it’s never too early or too late to get started saving for retirement, and even a small amount invested can accumulate dividends over time. Using your $600 stimulus to open a Roth IRA or another retirement investment account is a great way to get started. You can then consult with a wealth or investment advisor to decide the best way to invest the account and to make a plan for funding it going forward.
2. Start saving for college.
If you have children who are destined for college, saving up for the journey can help offset the burdensome costs associated with tuition, books, and more. Most 529 college savings plans, or qualified tuition plans, have low minimums and can be started with $600 or less. Contributions to a 529 college savings plan grow tax free. So, for families with small children, even $600 can grow into a healthy sum by the time they are old enough to apply for and head off to college.
3. Start or add to your emergency savings.
The COVID-19 pandemic has shown just how important maintaining emergency savings can be in a crisis. Having three to six months of expenses in an emergency fund is one of the most important things you can do for your long-term financial health. The $600 stimulus check can help get that savings account started or boost an emergency fund that has been depleted.
4. Invest in the stock market through a brokerage fund.
If you’ve already met your savings goals, then the $600 stimulus may present a good opportunity for investing in the stock market through a brokerage fund. Unlike other types of accounts on this list, earnings from brokerage accounts are taxable. But, with smart investments, the gains can still be worth it. Investing in the stock market is a good option for a medium-term investment, where it can have enough time to grow and weather dips in the market. If you’re just getting started with the stock market, it’s important to consult an investment advisor that can help you choose stocks that will suit your specific goals.
Need Guidance for Investing Your Stimulus Check?
At Southwestern Investment Group, we take pride in educating our clients about the best investments they can make with their money. Contact us today to learn how we can guide you with your investment goals.
