Connect with us

Market Analysis News

Options trading I don’t need my $1,200 stimulus check right now, so I’m spending it in 2 ways to invest in my future self


Options Market News

Options trading I don’t need my $1,200 stimulus check right now, so I’m spending it in 2 ways to invest in my future self

I should be getting a full $1,200 stimulus check from the federal government, and I’ve decided to spend it in two ways since my income hasn’t been affected by the coronavirus so far.First, I’ll put half in my Roth IRA — I have years before retirement to make up for any losses I might suffer…

Options trading I don’t need my $1,200 stimulus check right now, so I’m spending it in 2 ways to invest in my future self

Options trading

  • I should be getting a full $1,200 stimulus check from the federal government, and I’ve decided to spend it in two ways since my income hasn’t been affected by the coronavirus so far.
  • First, I’ll put half in my Roth IRA — I have years before retirement to make up for any losses I might suffer in the short term.
  • I’m going to save the other half in a high-yield savings account to replace my computer and phone when the need arises — this period of social distancing has shown me how much I rely on those devices for my business and life.
  • Find out who has the best high-yield savings account right now »

With the passage of the coronavirus stimulus package at the end of March, but the money not yet in the hands of individual Americans, now is the perfect time to decide how to use your stimulus check.

Based on my 2018 return, I should be on track to receive the full $1,200. And since I’ve been lucky enough so far to continue getting work as a freelance writer throughout the economic shutdown, I wanted to dedicate some serious thought to deciding on how best to make use of that cash infusion. 

The way I see it, I have four options for my check, once it arrives — spending it, investing it, saving it, or donating it, each with its own particular benefits to me, my community, and the economy. 

The decision I ultimately came to is a combination of a couple different options that I think is the best fit for my unique situation: splitting the sum in half to invest in my future self.

Options trading Investing in the market

Since I’m a young investor, with decades ahead of me until retirement, I’m planning on investing half of my stimulus check directly into the market. 

Because of my relatively modest income, I’m well under the income cap for a Roth IRA, so I spend all year setting aside cash to make sure I can make the full contribution to that retirement account come April. 

LoadingSomething is loading.

This year, I’d just made my 2019 contribution of $6,000 when the market began its slide. Frustratingly, that meant I’d not only missed out on rock-bottom share prices by a few short weeks, but also had no additional cash on hand to flush into the market, as so many financial experts were recommending. (Particularly for young investors like myself, with decades of runway before our planned retirements.)

Given that situation, my stimulus check is coming at the perfect time. While I hurriedly try to build up my saving reserves again and look for any cash to scrape into a whole or partial 2020 contribution, I plan to deposit $600 into my Roth to take advantage of low prices in the suffering market. 

It’s not much, and part of my brain is tempted to put the whole $1,200 into my retirement accounts. But in such an uncertain time, I convinced myself that it was safer to keep a good chunk of that change liquid, so it’s at my fingertips in case I should need it.

Options trading Investing in myself and my business

If there’s one thing that the quarantine has proven to me so far, it’s how much I rely on a few specific resources for the success of my career. As a freelancer who works entirely from home, I don’t need an office, a car, or a boss in order to run my business. What I do need — and what I’ve been leaning on more than ever — are my electronics.

As much of the world embraces social distancing, my phone and laptop have been the difference between disconnection and connection. Every single communication, from interactions to transactions, has been funneled through them, making it clear that both I and my income would be utterly lost without them.

That makes me pretty invested in making sure they continue to work, so I’ll be putting the second $600 of my stimulus check toward electronics improvements. That means finally upgrading my phone, a task I’ve been putting off for a few months now, and also setting aside an emergency fund for the replacement of my laptop. 

My hope is that I won’t need that emergency laptop fund for a while (please join me in knocking on wood), so I’ll be placing that cash into a high-yield savings account to allow it to grow uninterrupted until it’s time to withdraw it.

Options trading Choosing liquidity over risky growth

Obviously, interest rates have been dropping like stones as the Fed works to cushion the economy from the pandemic, so HYSAs are significantly less compelling now than they were even two months ago. (The rate on the Simple Protected Goals account that I used to save up for Invisalign, for example, has fallen by nearly half a point since January.) 

But even though the potential for growth in many HYSAs is significantly lower than you might find in, say, a certificate of deposit (CD) right now, I’m choosing to go the HYSA route because I want to make sure I have access to the funds when I need it. 

It’s hard to turn down a guaranteed growth rate, sure, but the trade-off of keeping the funds liquid is more than worth it for me. The whole point of this savings account is to minimize my downtime in the event of an electronics failure, after all, and experts agree that an emergency fund that you don’t have immediate access to isn’t much use in an emergency. No matter how high the growth rate is.

Plus, with any luck, my laptop replacement will be years down the road (another knock on wood here, if you don’t mind), and rates will be much improved by then, so I’ll end up with a tidy chunk of change that’s larger than my original stimulus check.

Do you have a personal experience with the coronavirus you’d like to share? Or a tip on how your town or community is handling the pandemic? Please email covidtips@businessinsider.com and tell us your story.

Get the latest coronavirus business & economic impact analysis from Business Insider Intelligence on how COVID-19 is affecting industries.

The information related to the following cards has been collected by Business Insider and has not been reviewed by the issuer: Chase Freedom Unlimited®, Chase Freedom®, Chase Slate®, Ink Business Preferred® Credit Card
Ink Business Cash℠ Credit Card, Ink Business Unlimited℠ Credit Card, Southwest Rapid Rewards® Premier Business Credit Card, Southwest Rapid Rewards® Performance Business Credit Card, IHG® Rewards Club Traveler Credit Card, United ClubSM Infinite Card, United℠ Business Card, British Airways Visa Signature® Card, The World Of Hyatt Credit Card, Citi Diamond Preferred Card, Citi Rewards+ Card, Citi Rewards+ Student Card, CitiBusiness AAdvantage Platinum Select World Mastercard, Citi AAdvantage Executive World Elite™ Mastercard, American Airlines AAdvantage MileUp Card, Citi Secured Mastercard, Costco Anywhere Visa Business Card by Citi, Citi Prestige Credit Card, Citi Premier Card, Citi Simplicity® Card

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

Real Life. Real News. Real Voices

Help us tell more of the stories that matter

Become a founding member
More:

Retirement
Savings
High-Yield Savings
emergency fund

Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

Subscribe to the newsletter news

We hate SPAM and promise to keep your email address safe

Click to comment

You must be logged in to post a comment Login

Leave a Reply

Top Stories

To Top