For many Americans, the most recent $1,400 stimulus check will go towards paying bills or starting an emergency fund. But if your finances are already in good shape, this money can be used to build your long-term wealth through investments. Not sure where you should invest? Our financial experts list their top recommendations for different investment choices.
Stocks are shares of ownership that publicly traded companies make available to retail investors and are traded on public exchanges such as the NASDAQ, Dow Jones Industrial, S&P 500. Stocks can be volatile in that they can either rise or fall due to consumer demand or company earnings.
We like S&P 500 Index Funds – a type of investment that contains all the stocks within the S&P 500 index and includes some of the largest publicly traded organizations in the U.S. such as Amazon, Apple, Johnson & Johnson, and Berkshire Hathaway. These funds are relatively safe and stable and have a long track record of success. There’s always the chance for short-term volatility, however, the market has historically seen positive returns over the long term.
Bonds are debt investments that the government and corporations issue to raise money and fund a project. When you purchase a bond, i.e., treasury, corporate, or municipal, you essentially lend money to the institution that issued the investment. Once the bond matures, you will receive the face value of your investment plus interest.
Growth Exchange-Traded Funds (ETFs)
ETFs trade on stock exchanges and function as a blended fund of stocks, bonds, and commodities. Like stocks, they can gain or lose value based on demand and company performance. Unlike stocks, they’re usually less volatile and include expense ratios (annual charges for holding shares).
Growth ETFs, a type of ETF fund, have more potential for rapid growth but are at higher risk since high-growth companies are often more volatile. However, many growth ETFs contain companies that have experienced explosive growth but are still stable. An example of this is a Vanguard Growth ETF that includes 200 stocks including Microsoft, Facebook, and Alphabet (Google’s parent company). This fund has an average 11% rate of return since 2004. If you invested your $1,400 stimulus check into this fund, at an average rate of return of 11%, you would have more than $32,000 after 30 years.
Like ETFs, mutual funds offer a mix of different investment types that blend stocks, bonds, and other asset classes into one fund. Depending in your investment approach, you can choose a low-risk, moderate-risk, or high-risk fund. A financial advisor such as Maggi Tax Advisory & Financial Group can help determine what option is best for your portfolio and handle the fund’s investment transactions and monitor performance.
Watch your stimulus check investment grow with Maggi Tax Advisory & Financial Group!
By investing your $1,400 stimulus check wisely, your money can reach its full potential! The experts at Maggi Tax Advisory & Financial Group can help make this happen! To learn about our financial services, please call our Hillsborough office at (813) 850-0131 and our Pinellas/Pasco office at (727) 351-6168.