President Biden is issuing stimulus checks at $1,400 per US citizen as part of the stimulus plan. With these $1,400 stimulus checks going out this week, it seems the financial markets may be the inadvertent recipient of much of it.
Deutsche Bank stimulus check survey results
Last month Deutsche Bank surveyed 430 investors with online brokerage accounts and here are the results.
- Those respondents between aged 25 and 34, intend to spend 50% of their stimulus payments on stocks.
- Meanwhile, the retail investors in the 18- to 24-year-old age bracket plan to allocate 40% of their stimulus checks to stocks.
- And the 35- to 54-year-old retail investors surveyed intend to spend around 37% of their checks on stock market investments.
Randy Frederick, VP of trading and derivatives for Charles Schwab, said:
“I do think that you will find a lot of that stimulus money will end up in the market, and I think if anything it’s a bullish catalyst,”
The reason the stimulus money heading for the stock market is considered bullish is because in a roundabout way it benefits the businesses involved and the wider economy.
However, that argument isn’t so valid if the recipients simply head to Reddit and put all their stimulus cash into the latest WallStreetBets target. This would mean the money heading for a GameStop type stock, which is purely based on speculation and greed.
Stimulus checks headed for stocks
So, what would a stimmy investor be tempted to put their newfound funds into?
There are various scenarios. The price of Bitcoin has jumped this weekend, which shows it may be top of investment choices.
However, there are many other areas that look enticing. When investing in a traditional portfolio, that incurs fees for buying or selling shares, then index funds or exchange traded funds (ETFs) are often a popular choice.
But if using Robinhood or its fee-free equivalent, then the investor is free to be choosier. Without having to worry about fees, the investment can be spread thinner and further.
Energy stock investing
Energy stocks are proving popular as the price of oil climbs. There’s the energy ETFs such as The Energy Select Sector SPDR Fund (NYSEARCA:XLE) or SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA:XOP). These are popular for investing in a basket of traditional oil and gas stocks such as Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP).
Gold stock investing
With inflation chatter getting louder, others are tempted by gold and silver stocks. The big favourites are Barrick (NYSE: GOLD) and Newmont Corporation (NYSE: NEW), but there are many smaller companies with potential for impressive gains.
ARK Invest funds
Then of course there’s Cathie Wood’s ARK Invest funds which cover disruptive innovation and give shareholders a chance to own Tesla (NASDAQ:TSLA), Bitcoin, or biotech’s, without having to go all in on the underlying stock. Will Cathie Woods ETFs see stimulus inflows? It seems highly likely.
If the tech focused ETFs don’t appeal, cannabis ETFs are another feasible target. That’s because pot stocks are gaining momentum with the likelihood of the Biden administration bringing legalisation to the federal level.
And what about the NFT mania? Many speculative investors may see NFTs as the fastest alternative way to put their stimulus check to work. This avoids the uncertainty of traditional stock market investments but heads for the modern version of alternative assets in the form of digital art
There are many exciting investment opportunities available today and some of these are bound to benefit from the stimulus check rollout.