You may have been reading and hearing about the stimulus package that’s passed recently and if you’re anything like me, you may be tired of hearing about the Corona Virus and all this crazy unusual volatility.
However, there’s some really important things to know!
The check stands to help Americans during the Covid-19 pandemic and the IRS will be sending checks to millions of Americans starting this month.
According to the IRS Information Center on the Impact Payment, you will receive $1,200 if your Adjusted Gross Income (AGI) is:
$75,000 or less filing as an individual
$112,500 or less filing as the head of household
You stand to receive a check for $2,400 if you make:
$150,000 or less filing jointly as a married couple
If your AGI is within any of the ranges below, you will receive a reduced check amount:
$75,00 and $99,00 filing single or married filing separately
$112,500 and $136,500 filing as the head of household
$150,000 and $198,000 filing jointly as a married couple
The deduction from your check looks to be about $5 for every $100 above the income thresholds of $75,000, $112,500, and $150,000.
Basically, if you are making over $200,00 AGI--- no stimulus for you --- at least for now.
Not sure where your payment is at?
Make sure to click on this link and find out more:
https://www.irs.gov/coronavirus/economic-impact-payments
Although some may seriously need this check for bills, groceries, and other necessities, if this pandemic has not affected you financially, you may consider investing your check and let it build wealth for you.
Here are a view ways investing could benefit you in the long run:
Investing in Stocks
Although it may seem like investing in the current market is a bad idea, it can actually be a great time to invest while the market prices are low. Historically the market has always bounced back even in trying times. For right now, while the market prices are low, it may be the best time to take advantage of those low prices.
All sorts of assets have been sold off in this bear market--- everything from airlines to hotels to energy stocks to banks. There could be some gold to find in them hills.
Make sure to check with your advisor to see what may be right for you and your risk tolerance.
Companies that provide things we are beginning to realize are very essential such as phones and internet for those working from home, groceries, etc. may be the types of companies to invest your Economic Impact Payment with.
Retirement Funds
If you have any type of retirement funds such as traditional IRAs or Roth IRAs, you may consider investing your money in your retirement. If you are still making it financially despite this crisis, it may be a good idea to invest in your future instead of spending the money elsewhere.
As a matter of fact, the deadline to get in your IRA or Roth contributions is normally 4/15. This year it has been extended all the way through 7/15/20.
So, you have 3 more months to get your contributions in!
Necessities
If you’re like me, you may have begun working from home. Although you may have a computer and phone that works fine, you may want to invest in better electronics for your home business and work.
A new phone and/or computer can make working from home a bit easier and allow your workflow to run more smoothly. It may be a smart idea to use your check to invest in better electronic products such as a phone, computer, faster internet, printer, fax machine, etc. This will definitely benefit you in the long run in the event this crisis goes on for longer than anticipated.
If you own a business, you may possibly even be able to write off some of those expenses. Make sure to check with your tax preparer to see what you may be able to invest in while writing off.
Debt
It may be a very smart idea to put your money into your debt. As the unemployment rate is sky high at the moment, it may be a good idea to pay off some of your debt and have some relief in that debt rain cloud that is always looming overhead.
It may not seem as much like an investment, but if the economy continues to fall as we are currently seeing, it may be helpful to pay in on those debts to help lower your monthly payment and interest charges.
In particular, consider getting rid of super high interest rate debt like credit cards or student loans with interest rate above 6% or personal lines of credit.
Alternatively, this is also a wonderful time to look at refinancing your debts. Interest rates are incredibly low. We’ve seen 10-year treasuries below 1% for about the last month. This has driven down borrowing costs for new loans.
You may want to consider refinancing your mortgage or your student loans or other personal debt if you can get a substantially lower interest rate.
Savings Accounts
This one is a bit more obvious, but when you think about the potential of our country right now, a savings account can prove to be very helpful if you don’t already have one. Keep in mind these are just a few options.
I highly suggest to keep a minimum of 3 to 6 months of living expenses in your checking and savings accounts.
There are many savings account options to consider. If you think a savings account is the way to go, be sure to do your research and find the type that is best for you.
Here are a few to consider:
- Regular Checking Accounts - These earn interest and allow for withdrawals with no hassle.
- Certificates of Deposit (CDs) - These tend to earn the highest interest but there is generally a limit on when you are able to withdraw any of the money. Generally, if you withdraw before the agreed upon time frame there are fees for early withdrawal they can impose.
- Money Market Account - Money market accounts also tend to pay higher interest rates but require a certain amount to deposit - generally around $1000 (perfect for this impact payment).
These are just a few ways you would invest your Economic Impact Payment.
The overall idea is that if you are currently financially stable and doing well despite this crisis, investing your money to build wealth can really benefit you in the future!
Consider how you can set yourself up for success by using your check to continue to build money on its own and essentially let it work for you.
Have any questions about this blog post? Considering alternative investment opportunities but want to know where to start? Send me an email at dave@daviddenniston.com and let’s chat!
Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation. Please consult with your accountant or tax advisor for specific guidance.