The number of people investing their stimulus checks has quintupled from 9% to 46%.
The stark contrast in money management behavior was found in a survey conducted by Betterment, an investing and savings app. Back in March 2020, 57% of respondents dedicated their initial stimulus check to an emergency fund or bills. For the latest stimulus check, authorized a year later, the increase in recipients investing the money is a positive indicator that people are experiencing more stable finances now than at the start of the pandemic.
As normalcy perished, so did typical hobbies. Without the ability to go to bars, restaurants, or entertainment events, many people developed new hobbies such as bingeing on Netflix, going grocery shopping, and day trading. Almost half (49%) of the investors surveyed by Betterment have been trading for two years or less.
This is most likely fueled by the recent pop-culture trend of meme stocks like GameStop, AMC, and Build-a-Bear. According to the survey, 67% of day traders purchased a meme stock during the Reddit-fueled stock market craze that started in January. Almost all of them (97%) stated that they would do it again.
The ways in which individuals actively choose which stocks to invest in varies, according to Betterment:
- Financial news websites: 61%
- Companies whose names I am familiar with: 52%
- Social media accounts or influencers: 42%
- Conversations with my friends and family: 40%
- Business television shows: 31%
“The trends outlined in this report seem to indicate that more people are dipping their toe into the investing pool and (so far) few have decided to walk away,” Betterment says in the report’s conclusion. “Whether this trend will continue—and the long-term impact it will have on people’s finances, health, stress, etc.—remains to be seen.”