US Retail Investors Get Stimulus Checks, Look To Stock Market

Retail investors are gearing up to use their $1,400 stimulus checks on the stock market, the Financial Times (FT) reported, and will likely invest around 37 percent of their checks in stocks.

The checks are part of President Joe Biden’s $1.9 trillion stimulus package and have begun going out this week.

FT reported that the amount spent on stocks will fluctuate between age and income level.

Other evidence showing the likelihood that Americans will spend some of their stimulus money on stocks includes a Household Pulse survey published by the U.S. Census Bureau, which said that around 15 percent of people planned to save or invest some of the money. And analysts with Bank of America said there could be an uptick in trading, explaining that retail investing would likely remain a force in some measure for the foreseeable future, FT reported.

Jim Reid, research strategist at Deutsche Bank, said there is “a younger, often new-to-investing and aggressive cohort not afraid to employ leverage” behind the recent spate in retail investing, according to FT. He added that retail investors use borrowing in order to boost their potential returns and losses.

The third round of stimulus payments, like the earlier two, has various media outless pontificating on how the money will be used. Market watchers say futures are on the rise, although there’s some skepticism that people might just save the as they did during previous iterations, which would stunt economic growth.

A Bank of America survey found that 36 percent of respondents would spend it, 30 percent would pay off debt, 25 percent would save, and 9 percent would invest. Bank of America lumped all three of the latter categories into one “savings” category since they all constituted the money remaining within the financial system sphere. Spending on consumer goods is a low priority.