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10 Worst Ways To Use Your $1,200 Stimulus Check

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10 Worst Ways To Use Your $1,200 Stimulus Check

It’s looking increasingly likely that many Americans will be getting at least one stimulus check from the government in coming weeks worth up to $1,200 per adult.

We compiled a list of 10 of the best things to do with your $1,200 stimulus check, but just for fun (and education) we decided to put together a list of 10 of the worst things to do with that check.

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1. Gambling

Yes, technically you can turn that $1,200 into $2,400 with one spin of the roulette wheel, but the odds aren’t in your favor. Plus, good luck finding a casino that is open.

2. Buying Penny Stocks

Sure, some traders make a killing trading in penny stocks, but penny stocks often have limited liquidity, limited regulation and limited information for investors, making them extremely dangerous investments. In fact, your odds of success may be much better at the casino.

3. Attempting To Time The Market Bottom

There are plenty of buying opportunities out there for long-term investors, but going all-in on trying to time the stock market bottom in the short-term is unwise. Even the most experienced and advanced professional traders have difficulty predicting where a volatile stock market is heading in the short-term, and there are still too many unknowns about the economic impact of the coronavirus for traders to have near-term visibility.

4. Buying Collectibles

Some collectibles, like fine art, antiques and rare coins, do appreciate in value over time. But your beanie babies, baseball cards and Dwayne “The Rock” Johnson memorabilia collection likely will not.

5. Buying A New Car

If you have the chance to buy a new car for $1,200, you are likely getting a great deal. But if you are using that $1,200 as part of a down payment for a new car, understand that the car likely loses way more than $1,200 in value as soon as you drive it off the lot.

6. Trip To Italy

The Italian countryside is beautiful and the culture is rich with history. But now is not the time.

7. Buying Your Own Company’s Stock

It can be very tempting to buy shares of your own employer’s stock because you have an intimate understanding of the day-to-day business of that company. However, unless you work in accounting or are an upper-level executive, employees of public companies typically don’t have a unique understanding of the financial health of a company.

8. Buying Any Single Company’s Stock

There will likely be plenty of big winners in the stock market five or 10 years down the line, but putting all your eggs in one basket is never a good idea. Investing in stocks is a great way to use that $1,200, but diversify that investment as much as possible to limit risk.

9. Investing In Something Complicated

If anyone tries to get you to invest in something that you don’t understand, it is likely a terrible investment. Buzzwords like “derivatives,” “collateralized,” and “blockchain” may sound impressive, but con artists intentionally make things convoluted to cover their tracks.

10. Shopping On Amazon

If you have steady income, no debt and enough savings to cover at least two months of expenses, feel free to hammer that Amazon.com, Inc. (NASDAQ: AMZN) “buy now” button as much as you like.

But these government checks are intended to make sure Americans are financially prepared to make it through this horrible crisis. If you're using it to treat yourself on Amazon rather than getting your personal finances in order for a potential layoff or extended health crisis, it is one of the worst ways to use your $1,200.

 

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