A pedestrian wearing a protective mask walks past the Macy’s Inc. flagship store in the Herald Square area of New York, United States, on Tuesday, November 17, 2020.
Victor J. Blue | Bloomberg | Getty Images
Every day, the line in front of the Gucci boutique in the mall in Short Hills, New Jersey, on the second floor, winds almost to the escalator.
Among the buyers waiting to enter are Gucci’s typical customers as well as new customers who just got $ 1,400 richer.
“Stimulus was definitely beneficial,” said Oliver Chen, retail analyst at Cowen & Co ..
As the economy takes on and the market Chen said new highs, ambitious purchases like handbags, belts, and shoes – especially those with large, recognizable logos – are gaining momentum, fueled by the recent round of direct payments approved by Congress and Congress President Joe Biden through the American rescue plan.
Like the first two direct reviews, this incentive is intended to be a stopgap solution for those affected by the Coronavirus crisis.
For the most part, checks are still used this way.
About 25% of households are Expenditures of this third payment round, according to the Federal Reserve Bank of New York. In particular, 13% of the most recent stimulus check is expected to be used for groceries and other essential items and only 8% for non-essential items. The rest is placed towards Debt repayment and savings.
But for many who have already been able to pay off debts and save more during the pandemic, “the stimulus check feels like free money,” said Andrea Woroch, consumer savings expert.
“People have this urge to go out and indulge themselves, almost as a reward for being locked up over the past year,” she said.
What Woroch calls “revenge spending” is perfectly fine as long as there is room for it in your budget (which may mean cutting something else out).
However, what generally advises against getting involved in a big ticket article. she says that Create wealth is a better option.
CNBC’s Jim Cramer advised that after people pay their bills, put most of their money into money S&P 500 index funds. In fact, many young private investors are already planning to spend part of their stimulus payments for stocks.
Here are some numbers that show why you should consider this too.
The S&P 500 now hovering nearby a record highhas achieved an average annual return of around 14% over the past 10 years.
Let’s say you invested $ 1,400 in the S&P 500 in 2010. According to Morningstar Direct, your investment would have grown to over $ 6,200 by the end of March 2021.
Go back even further, and the rise is staggering: A $ 1,400 investment in the S&P in 1980 would now be worth more than $ 150,000, Morningstar noted.
If you’ve bet on a specific company like Google – and could easily afford to lose the money – The return would be even higher.
Put $ 1,400 in Google Parents alphabet in 2004, you would have over $ 57,000 today. Although past returns don’t predict future results, Cramer says the search giant could Still be your best choice. (Here are his other tips for Invest your stimulus check in the stock market.)
Keep this in mind before turning your payment into an expensive wallet.