The coronavirus stimulus checks are arriving—here’s who should invest the money, according to experts

The IRS started depositing coronavirus stimulus checks into some Americans’ bank accounts this week.

Individuals will receive up to $1,200, married couples will get up to $2,400 and $500 will be added for every child.

There are income restrictions: If you earn more than $75,000 as an individual or $150,000 as a couple, the total amount you’re eligible to receive starts to decrease. If you earn $99,000 or more as an individual or $198,000 as a couple, you aren’t eligible to receive a stimulus check.

If you’re struggling to make ends meet, this money should first and foremost be used to cover essential bills and any debt obligations you may have. Next, you should use it to build up an emergency fund big enough to cover three to six months’ worth of expenses.

But if you’re able to cover your necessities and your emergency fund is fully stocked, “save it or invest it for the longer term,” says certified financial planner Kelly Crane. “Equities are a bargain now.” 

Andrew Westlin, a certified financial planner at Betterment, agrees. “This is a great time to be investing money into the stock market, especially if you’re younger and have a long time horizon,” he says. He advises starting with retirement accounts: Max out your 2019 individual retirement account or Roth IRA, if you haven’t already, or get a head start on your 2020 contributions.

The deadline for making 2019 IRA contributions has been extended to July 15th (the date your 2019 income tax returns are now due).

While periods of volatility can be a good time to dip your toe into the market, it’s important to remember that investing always comes with risk. Experts recommend contributing consistently by investing a fixed sum regularly over a long period of time. It’s a strategy called dollar-cost averaging and ensures that you won’t sell low and buy high when the market is volatile.

You’ll also want a balanced, diversified portfolio, which means having your money invested in different types of assets, like stocks and bonds.

Look into low-cost index funds, which Warren Buffett recommends. Index funds hold every stock in an index such as the S&P 500, including big-name companies such as Apple, Microsoft and Google. Because this type of fund is highly diversified, it stays relatively constant and avoids some of the risk that comes with picking individual stocks.

And remember, you’re investing for the long term. Don’t plan on touching any money you put into the stock market for many, many years.

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