Is investing your stimulus check a good idea?

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Last Updated on April 14, 2020 by Mark P.

If you’ve heard it once you’ve heard it a million times, but things aren’t getting any easier. That doesn’t mean things will get worse long term though. As my father and I rode together in my car to get takeout, donning our facemasks, asking one another if we each brought hand sanitizer, things for a moment seemed silly.

But like all rides with my father, this put us in a temporary environment where we could force the other to discuss difficult topics- today’s finances. Like all American families, ours has been hit with furloughs, layoffs, pay cuts, and more. We’re doing alright though, and like the rest of you, looking forward to that stimulus check coming in soon and hoping the country will open up even sooner.

So the question is out there, from my family to you, what will you do with your stimulus check?

Well, luckily there are people smarter than me out there doing their homework, such as the crew from the Motley Fool who suggest investing your stimulus check (unless you actually really, really need the money) might be the best long term investment in yourself.

Motley Fool contributor Katie Brockman writes that if “your finances are on shaky ground right now, that money might be best spent paying the bills or establishing an emergency fund.” However, “if you can afford it, investing this extra cash can be a great way to build long-term wealth.”

But what if you’re like my father, who told me he’s willing to go cash-heavy and put it directly into a high-interest savings account instead of investing it because the “market is too risky right now”? Brockman points out that “Stock prices fluctuate with the market, so when the market is down, so are stock prices. This makes it a good time to buy because the market is essentially on sale right now. In other words, you get more for your money if you buy during a market downturn.

While investing now may seem like you’re throwing your money away (especially if the market continues to get worse over the next few weeks or months), remember that, historically, the market has always recovered from even the worst recessions. So no matter how bad things look right now, the stock market will bounce back eventually. By investing now when stock prices are low, you stand to see substantial gains when the market does recover.”

So whether you want to go into an aggressive mutual fund or perhaps invest in some quality dividend stocks to establish reliable passive income, having your money work for you when the market is good and when the market is bad is perhaps the best thing you can do for your long term financial health.

For Brockman’s full article which is full of great advice, click here.