TYLER, Texas (KLTV) - COVID-19 relief payments are making their way to bank accounts, giving some a much-needed financial boost. Some may use it to catch up on bills, or buy big ticket items, while others are thinking of turning that money into more money.
In the last year between the pandemic and stimulus money going out, financial advisors are seeing savings rates increase from years prior. Senior Financial Advisor Will Goodson said there are a few things to consider before investing your money.
“That time horizon, if you’re a young person, maybe you’re early in your career, just getting started, you may not need that money for a long time, so you could tilt your investment more toward the stocks that tend to have a higher expected return over time,” said Goodson.
For those toward the end of their career or already retired he said, “You may want to balance that a little bit more. Maybe even have a little bit more in bonds.”
Having an emergency fund or some savings stocked away for those unexpected expenses is important Goodson said.
“That’s usually kind of the first best step, and then once you’ve got that to a good number, then you can look at investing.
Goodson also warns people of the risk of investing and potentially losing your investment. If you pick a startup company Goodson said you run the risk of their decision making.
“That stock could go to zero, that permanent loss of capital that we talk about,” Goodson said. “One of the ways that we encourage people to avoid that is to maybe stay away from buying those individuals stocks.”
Recently investing apps like Robinhood and Webull are becoming popular, as they offer free and easy access to investing. Goodson said it’s important to do your research before investing.
“Which is great because it kind of has taken down a lot of the traditional barriers that have existed,” Goodson said. “So it’s a net-positive, I think, that more people have access, but at the end of the day you need to have a plan on what you’re trying to achieve.”
Goodson said people can also put stimulus money toward a down payment on a home or other more immediate goals.
“When it comes to your investments, having a good strategy, being diversified, not putting all your eggs in one basket, being mindful of the costs to invest, and really focusing on your behavior,” Goodson said. “So, if you can focus on those things then generally speaking, over the long term, things should work out in your favor.”