A pedestrian wearing a protective mask passes past Tuesday, November 17, 2020 in front of the flagship store Macy’s Inc., in the Herald Square area of New York, USA.
Victor J. Blue | Bloomberg | Getty Images
One particular day, the line outside the Gucci store at the Mall in Short Hills, New Jersey, climbs around the second floor almost to the escalators.
Among the shoppers waiting to enter are Gucci’s typical clientele, as well as new customers who have just become richer by $ 1,400.
“The stimulus has definitely been beneficial,” said Oliver Chen, a retail analyst at Cowen & Co.
As the economy picks up and the market peaks, aspiring purchases such as handbags, belts and footwear, particularly those with large, recognizable logos, are gaining strength, Chen said, driven by the latest round of direct payments authorized by Congress and President Joe Biden through the American Rescue Plan.
More information on personal finance:
The latest batch of $ 1,400 stimulus control has been released
The federal aid is explained below
There may still be a way to claim that stimulus controls are missing
Like the first two direct controls, this stimulus aims to provide an opportunity for those who have been hard hit by the coronavirus crisis.
For the most part, the controls are still used that way.
About 25% of households spend this third round of payments, according to the Federal Reserve Bank of New York. Specifically, 13% of the last stimulus control is expected to go to food and other essential items and only 8% to non-essential items. The rest will be used for debt repayment and savings.
But for many who have already been able to pay off debt and save more throughout the pandemic, “stimulus control feels like free money,” said Andrea Woroch, a consumer savings expert.
“People have this desire to go out and get smart, almost as a reward for being locked up for the last year,” he said.
What Woroch calls “revenge spending” is perfectly fine, as long as there’s room for your budget (which can mean eliminating something else).
However, Woroch generally advises that they should not be wasted with a high-paying article. She says building wealth is a better option.
CNBC’s Jim Cramer advised that after people pay their bills, they should invest most of their money in an S&P 500 index fund. In fact, many young retail investors already plan to spend a portion of their payments on stimulus in actions.
Here are some numbers that show why you should consider this as well.
The S&P 500, which is now approaching a record high, has achieved an average annual return of around 14% in the last ten years.
Suppose you had invested $ 1,400 in the S&P 500 in 2010; your investment would have grown to more than $ 6,200 by the end of March 2021, according to data provided by Morningstar Direct.
Go back even further and the increase is impressive: a $ 1,400 investment in S&P in 1980 would now be worth more than $ 150,000, Morningstar found.