It is always wise to plan ahead, including for your stimulus check. Most would have already spent their first stimulus checks, but the second stimulus checks are coming, likely next month. So, it is better that you start planning how you would spend the next stimulus payment. If you are among those who don’t really need a coronavirus stimulus check to cover your necessities, then the best way to spend it would be to invest it.
You have several options to invest your coronavirus stimulus check, but the best ones are detailed below.
Contribute more to 401(k) – if your employer offers a 401(k), then the stimulus check amount could help you increase the amount that you are saving for your retirement. Moreover, it would allow you to take full advantage of any employer match to your workplace retirement plan.
Open an IRA – if you have hit the limit with your 401(k), or you don’t have a workplace retirement plan, then you could go for an IRA. An individual retirement account (IRA) is one of the best options to save for your retirement. You get a tax break as well.
Stock market – the current scenario could be a good time to make an investment in the stock market. However, you must remember that investing in the stock market comes with risk. It is recommended that you start slow and contribute a fixed sum regularly over a long period of time.
Also, you must strive for a balanced, diversified portfolio, meaning investing money in different assets, such as stocks, bonds and more. You can also go for low-cost index funds. Such funds allow you to invest in big-name companies, as well as diversify your holdings.
Invest in yourself or pay off debt
Learn a new skill – you can also invest the coronavirus stimulus check on yourself. This means, you could use it to learn a new skill. Learning a new skill will pay you back in the long-term. It could also make your resume more attractive, help you perform better at your job, or even apply for a new position.
Pay debt – Another way to use your stimulus check would be to reduce your debt load. So, if you haven’t paid your credit card debt or any other debt obligation, then you could use the stimulus check to pay that debt. Doing this will make your financial situation better, as well as avoid interest or penalties that you would have to pay had you not paid your debt.
It is also a good time to lower the burden of student loans. Since interest and payments are suspended through September 30, any payment you make toward a student debt loan will be used entirely to pay your principal.
It is likely that your return on investment by paying down the debt would be more than the ROI you could get by investing it in the market.