Best Place to Invest Your Stimulus Check? OR JUST SAVE IT?

Hey everyone, it's Mike Andes and you're listening to the Business Boot Camp podcast. Today I'm going to be talking about the worst good and the best way you can spend your stimulus check as you've gotten it from this whole virus and everything that's happened. A lot of us have gotten personal checks from the government. The $1,200 perhaps some of us have got the PPP forgivable loan EIDL grant. There's been a bunch of money pumped in the system. Today we're going to be talking about the best way and the worst way to spend that money. Before we get into today's show, a big thank you to today's sponsor, which is Gusto. If you haven't already, go to gusto.combootcamp. if you are a small business owner and you have employees, this is going to allow you to do automatic bank transfers for their payroll. And it makes it very convenient, very easy and it's very cheap. Check it out today and try it out for 90 days completely free by going to gusto.com.

Alright, so three different ways that you can spend the stimulus check that you've just received from the government and that again, that stimulus check can come in the form of the $1,200 per person check that most Americans got as adults. If you were under $75,000 in annual income on your last tax return, and you know it slowly went down in terms of $1,200 or below as you made more money than $75,000 per year. But there's that money. There's money for small businesses. There's just a lot of money being pumped into the system. Now, today we're not going to talk about the chance of inflation or national debt or anything like that. All I care about is how you, either consumer or a business owner are spending that money. The worst way you can spend the stimulus check is by buying depreciating assets. Now, what is a depreciating asset? It's an asset that over time loses its value. That could be a vehicle, a car. And most of us know that when you drive a brand new car off of a lot, that immediately the value of that asset, because it isn't an asset. It has value. It has retail value. You could go sell it. It is worth something, it is an asset. There's value that would go onto a balance sheet. There's a certain level of value. However, if it's an appreciating asset like a car, over time it depreciates in value. And so a depreciating asset could also just be like a cell phone or maybe it's a vacation, like your depreciating asset for that vacation. Aside from the memories that you get as soon as you spend the money, there is no value in that ticket, an airplane ticket. Once you've gotten the value, that is taken the flight or taken a cruise or done something fun on the weekend, spend a night at a hotel, whatever it might be. Once you've spent that money, there is no long term asset that you're going to put into your balance sheet, whether it be personal or in your business. And so a depreciating asset is anything that over time decreases in value. And that could be physical goods like a cell phone. It could be actual assets like a car that have value, but over the course of five, 10, 15 years, go from $30,000 to zero. And so these are the things to be thinking about when it's the worst. The worst way to spend your stimulus check is by buying a depreciating asset. And that could be any sort of good that depreciates over time and decreases in value. Now, the second way you could spend your stimulus check is okay. It's not great, but it's okay. And that is saving your money. And we're seeing right now record saving rates in the United States. And a lot of that has to do with fear. People are afraid of not having a job, not having stability, and they're saving money hoarding cash in a savings account in order to make sure that they have cash if they do lose their job or if something they do a pay cut or something happens in their financial security, making sure they have enough money for the toilet paper and the food at the grocery store that's all of a sudden gotten so much more expensive. So the second way, the okay way to spend your money is to save the money. The reason it's not great, this option of putting this into a savings account is because right now we are at record lows of interest rate. The United States, the Treasury has cut the interest rate to 0%, which means if you put your money into a savings account, you're essentially making nothing on interest. It's just gonna sit there. Now, what you don't really think about, what most people don't really understand, is that that $1200, let's say that you put into a Savings account in 10 years is not worth $1,200 because of this little thing called infl. Inflation. And inflation is basically means that $1 today is worth less in a year and it's worth less five years from now, and it's worth less 10 years from now. That's why 30 years ago maybe you bought a house for $50,000, whereas now that same house might be worth $500,000. It's because the value of the dollar is going down because of inflation. And typically that inflation rate is around 2% per year. What a lot of people are afraid of right now is that because the influx of money coming in from the government through all of these stimulus packages, there's going to be an inflationary period over the next few years. We have not seen that yet as of the time of this recording. In terms of inflation, a lot of it happening, but it's definitely, according to historical data, going to happen when more money supply is being pumped into our economy like it is currently from the Federal reserve. So cash, $1,200 today might be worth only $1,150 next year. And if we go into an inflationary period where we do hit 4 or 5% inflation, that money is actually depreciating over time. If you kind of look at inflation as a way of lowering the value of that money. Now, the third way and the best way to spend your money that you just got from your stimulus check is on assets, real assets. And the reason I say this is many fold. Number one, I'm looking at what is the government protecting? Who are they protecting right now in this whole economic crisis? Now, regardless of your political stance, regardless of your economic position, and regardless of what your opinions are on the fairness of this, at the end of the day, the people right now that are being protected the most are people that have assets, that is stocks, real estate and businesses. There's a reason why if you look at the amount of money that's been pumped into the economy, the percentage that's gone to the consumer versus the percentage that's gone into businesses and stocks and junk bonds and all of these things is to protect businesses, stocks and real assets that you can buy. And so the last, the third, the best, the greatest way to spend the money that you've gotten from stimulus is by making sure you get involved in assets. Alright, stocks and then we're talking about real estate and then we're talking about businesses. These are the three things that are actually have value. And the reason that they're so good is because even if inflation does happen, if I buy a piece of real estate and inflation occurs, the price, the value of that real estate will increase with inflation. Whereas If I put that same $1200 or money into a savings account, it's becoming worth less over time. So real assets, if there is inflation, you protect yourself against inflation by having those assets because they also raise in value. Now we're looking at a stock market that is all over the place right now. It's up, it's down. You know, there's news and some stocks are considerably, really overvalued because people are putting money in there just to be safe. And there's a lot of stocks that really went down 30% are already back to where they were three or four months ago. However, their revenues are like still half. And so it doesn't make sense. And yes, the stock market as a whole is probably really overvalued considering the fact that as I record this at the end of May, a lot of companies are going to lose money this quarter and yet the stock market is at like 70 and 80% of what it was just a few months ago when it was breaking records, which is absolutely crazy. However, when you buy a stock, when you buy a share from a business or on the public markets, you're owning an asset, it's a piece of something. Which means if time goes on and we recover and you believe in that stock, you believe in that business, you're going to have a lot of value beyond the 0.0001% that you'd get at a savings account or a checking account or even a high yield interest account where you might make 1.5%. These are things that the government's trying to protect right now. There's a reason why they went in and bought junk bonds, which basically they bought bonds from companies that usually they wouldn't really trust in terms of their credit rating. But they did it. Why? Because they wanted to protect the stock market. And there's massive bailouts that these companies, they don't want to go out of business if they have hundreds of thousands of employees. And so the government will step in and save them from bankruptcy or help them or buy bonds or give them money to make sure they survive. Now the last way is by owning a business, whether it be the PPP program or the Eidl advance and loan program, Main street lending program, which is for kind of larger businesses that are considered small. Those businesses are getting money from the government as well. Again, they're being protected by the government. They're the places where you want to be in terms of keeping your money. And if you put $1,200 into a well oiled machine, A business, whether it be a franchise, whether it be an owner operated business, you can really, if it's a well oiled machine, it has a solid profit margin. You can make a lot of money on return on that money. If I spend $1,500 in marketing today and I can generate $15,000 in revenue and 20% of that is profit on the bottom line in my pocket, that means out of that $15,000 I am going to make $3,000, which essentially means I took my $1,200 and I made it 3,000. That's almost three.

If I'm investing that money into a business, which again, if you have a good business, it is an asset, it's something that's worth money. You could sell it tomorrow, it's increasing in value and the reason it's worth something is because it's generating cash flow. And so these are things I talk about on the Business Boot Camp podcast landscape business course where I help people start their lawn care businesses. And we're at Augusta Lawn Care, the franchise I started where we focus on creating that well oiled machine, creating solid systems to produce a predictable profit margin that you can invest money into and you can take your stimulus check, put it into marketing and it generate a really good return on investment. So the worst way you can spend money right now is to go buy a cell phone or go buy a car or any depreciating asset or food or candy bars or a computer. Those are depreciating assets. You could go save your money, but this is only the second way. It's only good, it's only okay, like I'm happy you didn't spend the money on some crazy vacation. But, but it's not the best in terms of investing. You're not going to make a bunch of return and with the way that inflation could go, you're not going to be in a good spot. But number three is the best way. Involve yourself and your money and invest in real assets, stocks, real estate and your own business. If you have comments or questions, post below. Thank you so much for watching. Until next time, be great. Nothing else pays.