A stimulus check refers to a check sent by the U.S federal government to taxpayers. These checks provide financial assistance to millions of taxpayers struggling financially. Once the consumers spend the checks, they, in turn, stimulate the economy by driving the revenues of retailers and manufacturers. Due to the coronavirus pandemic, thousands of American households are struggling to survive, hence the distribution of stimulus checks. Here are five ways you can invest your stimulus check for maximum benefits.
1. Start an Emergency Fund
If you don’t have an emergency fund, the coronavirus pandemic is a chance for you to start one. You can save your stimulus check for rainy days, especially if you can lower your spending and happen to have another source of income.
When starting an investment fund, consider a savings account separate from your usual checking account. You should also find a savings account with a high-interest rate and preferably zero monthly fees. Other attributes to look for include:
- A low opening balance. Plenty of banks provide a $0 minimum opening balance.
- Look for an Annual Percentage Yield (APY) above 1.3%. Some institutions go as high as 1.7%.
- Read the fine print and check FDIC insurance and regulation, especially for online banks.
2. Invest in Stocks
All rich people have one thing in common- they own shares in other companies. It doesn’t matter if your business is prospering; investing in other competitive and healthy companies is a great way to secure passive income in the future.
Fortunately, you can take a course on stocks and investments online. It’s also wise to consult a stockbroker before buying shares. It will also help you decide if you want a full-time or discount broker. There are also online crowdfunding platforms where you can join other investors in supporting businesses and earning dividends in return.
3. Increase Your Retirement Savings
It’s easy to ignore your investment fund until retirement is only a few years away. However, saving now is the best way to grow your investment fund. Take advantage of compounded interest by increasing your retirement savings now. If you have a 401(k) account, you cannot fund your retirement savings directly. However, you can increase the amount from your paycheck. Alternatively, you can open a Roth IRA account and start saving.
4. Pay Off Pending and Future Bills
Settling your bills is a great way to spend your stimulus check. Paying early, especially during the coronavirus pandemic, means that you don’t have to worry about looming deadlines or penalties due to late payments. Your credit score will also benefit from cleared bills. As you pay off the bills, review your phone, insurance, and internet providers. Take your time and confirm if there are more affordable options around you.
5. Eliminate Credit Card Debt
Your credit card company is enjoying high interest from your debts. Credit card debt is hard to pay off and harmful for your credit score. Once you clear the debt, consider lowering your debt to credit ratio by swiping your credit card for critical situations only.
Investing your stimulus check could is a great way to secure your financial future. For more information about investments, join thousands of others on SavingHabits today.