As millions of Americans are hitting the refresh button over and over again on their online banking app, desperately hoping to receive their $1,200 stimulus check today, a new proposal would give you $2,000 a month for the next year. Yes, that is right, $2,000 per month.
Two House Democrats want to enhance the $2.2 trillion stimulus package known as the CARES Act. Representatives Tim Ryan (D-OH) and Ro Khanna (D-CA) have introduced new congressional legislation called the Emergency Money for the People Act.
The concept is to provide $2,000 per month to Americans who have been impacted by the COVID-19 pandemic.
Basically this would work like this:
- Eligible Americans would receive $2,000 in cash per month guaranteed for at least six months, up to 1-year
- These monthly cash payments would continue until the employment to population ratio for people ages 16 and older is greater than 60%.
- The monthly cash payments would not count as income.
- The monthly cash payments would not adversely impact anyone’s ability to qualify for an income-based federal or state assistance program.
So this is basically, once again, tax free money, being printed by the Fed without much concern to the long-term economic impact this will have to inflation, but that is another video. Just think for a moment there are about 203,508,504 people in the US over the age of 16. Multiply that by $24,000 and this proposal now spends $4,884,204,102,240.00. This would put the national debt to about $28 trillion. This would be insane and would drive the costs of everything through the roof, but that is not what I am going to cover in this view.
No, today I want to focus on what you could do with this stimulus money if it was deposited into your account. I will base this on a married couple pooling their money, which means the couple could get $48k in free money in this hypothetical situation.
Well you could spend it, remember this is a stimulus check right? A brand-New 2020 Mercedes-Benz C 300 AWD 4MATIC would be $48,475. Of course there are taxes and a few other fees, so you probably would need to kick in a few grand cash to get this car. Or you could tax advantage of Mercedes-Benz 0% interest option, put $45k down and finance the rest?
But, no, that’s probably not a wise financial decision. As nice as a new Benz would look sitting in the driveway, I wouldn’t recommend this.
No, I think the wise idea would be to invest. So this got me thinking. If you and your spouse take the $48,000, what could you invest it in and how long would it take to get $1 million dollars?
Well you could put it in your savings account and if you are LUCKILY to have a high-interest rate savings account of 1% (most are WAY less than this) it would take you 306 years to earn just over $1million dollars 1,008,281.07 to be exact, but honestly, who cares. Because, I don’t know about you, but 306 years seems a little long to wait and anyone that knows me personally, knows I am NOT that patient.
Ok, so many a high-interest CD, you know those Certificates of Deposit your grandmother gets at the local bank? Well, the best rate I can find today online is 1.85%. It may not sound like much but that extra .85% did shave off 140 years off your time horizon. Now it would only take 166 years for your $48,000 to equal $1,006,404.97.
Ok, ok, I know, that is still WAY TOO LONG.
So how about some more realistic ways?
How about the stock market? If you look back at the S&P over the past 100 years, the S&P averages a return of a little over 8% per year. Now of course there are good days and bad days, but that is the average of the past 100 years.
Now if somehow you magically could step into a time machine and deposit $48,000 into a trading account how far back would you need Doc Brown to set the Delorean? You would need to go back to 34 years, back to 1986. Then if you were smart enough to cash out all of your stocks the beginning of February, 2020 (come on now, you have a time machine, no excuses), you would have $1,131,226.50.
Of course, I know you do not have a time machine, I have one, but I only share it with my friends. But, we are friends right? My best of friends always smash the like button for the YouTube algorithm.
If you are one of those that didn’t smash the like button, I guess your only option would be to buy the stocks now and cash out in the year 2054.
Using this same plan of putting your $48k into the S&P, if you make one slight change and also add $250 per month, every month, as part of a Roth IRA plan. Check out my video on Roth IRAs, you can knock five years off your wait and now cash out with just over 1 million dollars around year 2049.
Double that to $500 per month extra into your Roth IRA and you can knock off an extra 5 years. Now we are down to 2044.
Yea, I know 24 years is a long time, but think of it this way. If you are 16 now, which is the lowest age eligible for this hypothetical stimulus plan you would only be 40 years old and a millionaire.
No work, easy, free work from the government. You were smart and took their free money and turned it into a nice retirement for yourself. Come on, you know your dumb friends will blow the money every month and have absolutely NOTHING to show for it at the end of the year.
In summary. If you spend your money, you will not be a millionaire when you retire. If you put it in a savings account . . . well in 306 years you can be a millionaire, a CD remember that was 166 years.
But if you are smart you invest it in a good S&P fund anywhere from 25’ish to 35 or so years and, boom you are a millionaire!
In closing, do I really think this will get passed by the House, a Republican lead Senate, and then finally signed by President Trump, well . . . no, not really, but it still makes for some good time thinking about it.
Thanks for watching, I really hope you enjoyed the video. Please make sure you like & subscribe. Don’t forget to check out the webull link and grab your two free stocks today, then you can start putting your $48k in webull as soon as this gets signed into law 🙂