The Federal Stimulus Check And Investing In Stocks During The COVID-19 Pandemic

Stimulus Check
stimulus check

The three rounds of stimulus checks were a boon for most people in the low and moderate-income categories.

Most spent it on food, immediate necessities, rent, and utility bills. But for a substantial number of families and individuals, the stimulus check payments were a bonus as they already had a steady income for their everyday needs. Such families were able to settle their high-interest credits like credit card debts. Some even managed to invest this extra amount.

People on a safe financial footing had the advantage of investing the stimulus checks money in stocks. This was especially true of the third check, the Economic Impact Payments, which were part of the American Rescue Plan Act signed by President Biden in March 2021, This was immediately after he came to power a couple of months before in January 2021.

Subject to the shares they invested in, they managed to substantially increase the payments. But many made losses in the stock market and wished they had invested the money instead in their savings bank account or invested in schemes that assured fixed returns.

The 3 rounds of stimulus checks included the $1,200 paid in April 2020 under the CARES Act. It was followed by the $600 stimulus check in December 2020. The Economic Impact Payment, or the third stimulus check, came immediately after, starting March 2021, and was worth $1,400.

A look into how investing trends worked out when people invested in some stocks showed what their money would have stood today had they invested in some particular stocks.

Investing Stimulus Check Money In Apple Would Have Led To Substantial Gains

Apple has always been a favorite of investors, but like all other tech stocks, has faced a bumpy 2022. But despite the setbacks, investors have enjoyed a fairly steady run right after the stock crashed in March 2020 right up to end-2021.

At its lowest during the start of the pandemic, Apple was at around $57 but ended 2020 at over double that price of around $133. But by end-2021, it had moved close to the $180 mark, ending at $178.

It has now descended to $134, but that is almost exactly the price when the $600 stimulus checks arrived in December 2020.

So anyone who invested their first stimulus check amount of $1,200 should have more than doubled the amount to $3,017.80.With the prices of Apple stock more than double, the gains would have been substantial.

The second stimulus check, which was worth $600, should have increased to around $744.57 at present. When the third stimulus check arrived Apple was priced at around $120. So an investment of $1,400 at that stage would be $1,696.32 today.

Investing In Tesla

At the time the nation went into lockdown and the market crashed, Tesla stocks were trading at $90 and below a share. A year later, in January 2021, it had reached an astonishing $880. A 900% gain in one year. The astonishing spurt turned Tesla into the stock investment of 2020 and turned Elon Musk into the world’s richest person.

People who invested when the first stimulus check was paid made a gain of around $9,500, but investors who caught those gains in 2020 emerged as the winner. The Tesla stock, unfortunately, fell in the first quarter of last year and did not touch its previous highs till October of the same year.

Tesla stock closed above the $1,000 mark at the end of 2021 after peaking at above $1,222. It has now slid down to $662, only marginally more than when the 2nd and 3rd rounds of payments started being transferred to the bank account of beneficiaries.

People who waited to get their second stimulus check before investing would have seen their $600 payment increasing to $761.32. People who invested their third stimulus check of $1,400 would have seen their investment increase to touch $1,538.25.

A Tech-Stock Story That Lost Its Shine

Amazon stocks were the darling of investors for a long time, though the shine has been lost somewhat in the past several months. While investing in the first stimulus check in March 2020 would have been a winner for investors, investing the next two payments in Amazon would have led to a loss.

In the first week of June, Amazon effected a 20-1 stock split. It meant that its stock costs were down to one-twentieth what it was a few days ago. The rates mentioned are according to the one post on the split in the Amazon stocks.

In March 2020 when the first payment was declared, Amazon stocks were trading at a post-split price of around $89. It stands at $104 today. An investment of the first payment of $1,200 would have touched $1,468.69. When the second stimulus check came out, the price was $163, way higher than it is today. So the investment of the second round would be worth only $452.41, a loss of $148.

Amazon stocks were $155 in March 2021. So investing the third check of $1,400 would have led to a substantial loss, more than by investing the second payment. It might have sunk close to the $1,000 mark.

Netflix has proved to be the biggest disappointment of 2022. It currently stands at $173, a crash from its October 2021 high of $690. This is the lowest price for Netflix since the end of 2017.

So investing in the first stimulus check would have been a disaster as it would have almost halved to $643.95. The second round of investment would have faced a worse disaster, sinking from $600 to a mere $240.61. Investing the third stimulus check amount would have been a disaster as the amount would have shrunk to a mere $506.65, losing nearly two-thirds of the original value.

Disney Did Not Have It Good Either

During the low in the stock market in March two years ago, Disney was at $86, lower than the present price of $97. The $1,200 first stimulus check would be worth $1,322.37 today. But there had been many ups and downs in between. The stocks were at $181 when the second stimulus check was issued. But at today’s rates, the $600 check would only be worth $443.03. The Disney stock peaked in March 2021 at $197 just when the third stimulus check was announced. The $1,400 stimulus check would be worth a mere $800.17 at today’s rates.