Homestimulus checkStimulus controls helped 'democratize investing' among black and Hispanic Americans, study finds...

Stimulus controls helped ‘democratize investing’ among black and Hispanic Americans, study finds [Video]

Federal stimulus has helped millions of Americans survive the worst of the pandemic. For some, the payments also allowed them to finally invest.

A new study found that two in five stimulus check recipients used the money for more than one purpose. Most notably, 47% of black and Hispanic Americans used payments in more than one way, compared to 32% of white adults, according to the 2021 Financial Capability Study of FINRA Investor Education Foundation, a nonprofit organization that is committed to financial education and empowerment.

The analysis, conducted from June to October 2021, surveyed more than 26,000 stimulus recipients in the US and found that black and Hispanic adults between the ages of 18 and 40 were more likely to invest some of the money in the stock market than white respondents in the same. age group.

“Many stimulus recipients reported spending the money in multiple ways, especially black/African American and Hispanic adults,” Gerri Walsh, president of the FINRA Investor Education Foundation, told Yahoo Money. “In fact, while black and Hispanic young adults were more likely to invest than whites, they were also more likely to use the money to make purchases and pay bills.”

The IRS sent the third and final round of economic impact payments to eligible individuals in March 2021.  Most Americans received up to $1,400 in incentive checks and an additional $1,400 for each qualifying dependent.  (Credit: Getty Creative)

The IRS sent the third and final round of economic impact payments to eligible individuals in March 2021. Most Americans received up to $1,400 in incentive checks and an additional $1,400 for each qualifying dependent. (Credit: Getty Creative)

Stimulus controls kept household finances stable

Stimulus controls helped strengthen household finances, according to FINRA’s study, and contributed to some of the financial resilience documented in 2021.

More than 169 million payments were made by the IRS last year in the third and final round of stimulus checks to households across the country, with $1,400 reaching most households. According to FINRA’s financial capacity study, Americans used the money for its intended purpose.

More than 78% of those surveyed reported receiving at least one pandemic-related stimulus payment. About 59% of respondents used the money to make purchases or pay bills, consistent with the goals of the American Rescue Plan, the analysis found. Another 38% added the money to their savings, while 33% used it to pay off debt.

During the pandemic, stimulus controls helped Americans stay afloat as many experienced an unexpected drop in income.  According to FINRA, incentive payments and improved unemployment benefits accounted for most of the financial resilience documented in 2021.  (Credit: Getty Creative)

During the pandemic, stimulus controls helped Americans stay afloat as many experienced an unexpected drop in income. According to FINRA, incentive payments and improved unemployment benefits accounted for most of the financial resilience documented in 2021. (Credit: Getty Creative)

In addition, some respondents said that they have donated some money to individuals or organizations or invested in the stock market (7% and 6%), respectively.

“Nearly 6 in 10 respondents reported making purchases or paying bills with the stimulus money they received, suggesting that a majority used the stimulus as intended,” Walsh said. “Of course we have to keep in mind that many stimulus funds have used for more than one purpose.”

The stimulus funds reshaped how Americans thought about money, which may have helped boost their understanding of personal finance, Walsh said.

“As more households had emergency savings in 2021 than in 2018, despite the pandemic-related economic turmoil, stimulus payments may have contributed at least in part to an increase in some of the financial capacity measures we saw from 2018 to 2021,” said Walsh. “However, more work is needed to understand the relationship between incentive payments and financial capabilities.”

Young people between the ages of 18 and 40 were more likely to invest some of their stimulus funds in the stock market, FINRA found.  Those most likely to invest were black and Hispanic men.  (Credit: Getty Creative).

Young people between the ages of 18 and 40 were more likely to invest some of their stimulus funds in the stock market, FINRA found. Those most likely to invest were black and Hispanic men. (Credit: Getty Creative).

Younger adults were more likely to invest stimulus funds

Some stimulus checks ended up in the stock market, and those most likely to invest were younger adults with college degrees and those with higher incomes.

Compared to all other age groups, those aged 18-40 were found to have spent some of their stimulus in the stock market.

Among 18 to 40-year-olds, black Americans were 6.27% more likely to invest their stimulus money than whites. According to FINRA, this was followed by Hispanic respondents who were 2.5% more likely to report using the investment incentive payments than white respondents.

According to Walsh, the financial buffer of the stimulus checks created “lower barriers to investment” for black and Hispanic young adults.

“Including easy access and the ability to invest with smaller amounts of money, investing has been democratized in several ways,” she said.

“It may be that when both the opportunity and the means to invest are presented, demographic groups that are typically underrepresented in the investor ranks might consider investing,” Walsh said. “Since investing is one way to narrow the wealth gap in America, this is an encouraging finding in many ways.”

Gabriella is a personal finance reporter at Yahoo Money. Follow her on Twitter @__gabriellacruz.

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