Get a stimulus or tax refund? How to safely invest it
Surveys reveal that many Americans plan to spend portions of their stimulus or tax returns on investments, hoping to make even more money.
TAMPA, Fla. — As stimulus checks and tax returns hit bank accounts, many Americans are deciding how best to use that money.
Some are paying off bills that have been accumulating during the pandemic. Others are spending and splurging — and a lot are thinking about, hopefully, turning that money into even more money.
A recent survey by Deutsche Bank reveals that half of 25 to 34-year-olds plan to spend at least 50 percent of their stimulus payments by investing in the stock market.
Eighteen to 24-year-olds plan to spend a little less than half of their stimulus funds, 40 percent, on stocks. Thirty-five to 54-year-olds plan to use about 37 percent of their funds on investments. Since investing can be riskier closer to retirement, of the people surveyed over the age of 55 planned to only invest 16 percent of their stimulus into stocks.
Many people are planning to invest for the first time, especially since the news of GameStop stocks skyrocketing earlier this year. So what do you need to know before you invest for the very first time? We went to an expert, the CEO and founder of BlackBox Stocks, Gust Kepler.
There are a lot of ways to enter into the investment market. Do you want to use a broker or do it on your own? Will you push for long-term investment or try day trading? Will you go through a firm or use an app? Do you understand how the tex requirements differ between your investments?
Investing can be time-consuming and requires some attention if you want to get really involved. “It’s not something you can engage with and not watch continuously, it can be a lot of work,” Kepler explained.
The stock market skyrockets and dips daily. If seeing your potential earnings rise and fall makes you anxious, consider more steady long-term investments. Understanding how the financial market operates is important, especially if you’re lured to investing by the idea of making a lot of money quickly as many did with Gamestop.
“Jumping on that train while it’s rolling can be really dangerous. It’s like playing musical chairs. You can be left without a seat. One day there’s a huge sell-off and you’re upside down when you were very profitable a day before,” Kepler said.
Be wary of get-rich-quick schemes
As always, you should be cautious when it comes to your hard-earned money. Making money in the stock market can take a lot of time. So when someone says they can make you a ton of money in no time, do some deep digging into their practices.
“Watch for ads, especially on social media about trading groups, trading systems that promise large returns and so-called experts that are going to coach you and show you how they made a million dollars when they could be very wealthy from other means,” Kepler said.
He says you should educate yourself about how the market and investments work and then do research about your potential advisors and brokers before handing over your money.
What other people are reading right now: