By Aman Jain. Originally published at ValueWalk.
The third round of stimulus checks started going out over two weeks ago, and people have started spending it. One would expect people to spend the stimulus payment on necessities, such as food or rent. However, there are reports that some coronavirus stimulus checks are finding their way to Las Vegas.
Q4 2020 hedge fund letters, conferences and more
Coronavirus stimulus checks stimulating Las Vegas
A report from news3lv, citing economist Mike Pequeen, says Las Vegas is benefitting from the $1.9 trillion American Rescue Plan. Pequeen noted that there is no reliable data to say how much money has flown into Las Vegas, but many people are certainly spending all or some of their coronavirus stimulus payment in Las Vegas as tourists.
It is not exactly clear whether or not such spending will help to meet the objective of the massive stimulus package, which is to boost the economy. Nevertheless, it would give some relief to the casino owners, who haven’t seen much footfall since the start of the pandemic.
Las Vegas isn’t the only unlikely beneficiary of the stimulus checks. Some of the stimulus will likely flow to the stock markets as well.
A recent survey from Deutsche Bank of the investors using a brokerage platform found that half of those between the ages of 25 and 34 could use their stimulus checks to invest in stocks. Further, the survey (of 43 retail investors) found that on average, people plan to spend about 37% of their stimulus payment on equities.
This could mean around $25 billion to $150 billion would be flowing into stocks if all stimulus recipients invested the same proportion of money in the stock market, notes Deutsche Bank strategist Parag Thatte.
Beat way to spend stimulus money
Experts believe that if the stimulus money flows into the stock market, it would likely benefit the stocks favored by retail investors active on social media platforms, such as GameStop.
A similar trend was seen at the time of the first stimulus checks as well. At the time, the interest of individual investors soared as the pandemic left them with more time to pursue their trading skills. TD Ameritrade witnessed a record amount of retail accounts opened during the first nine months of last year.
Spending in the stock market will not directly benefit the economy. The objective of the stimulus package will be met only if people put the stimulus money back into the economy by meeting their urgent needs.
In case you don’t really need the stimulus money but have still got the payment, the best use would be to pay your outstanding debt. Another way would be to save for college educations, such as a 529 college savings account. A 529 college savings account will ensure that your money grows tax-free and there are no taxes on gains even when the money is pulled out to pay for education.
The post Visitors spending coronavirus stimulus checks in Las Vegas? appeared first on ValueWalk.
Sign up for ValueWalk’s free newsletter here.
