What a second stimulus package may look like
LEXINGTON, Ky. (WKYT) - The Senate has started talks this week on a second stimulus directly for Americans. Parameters of what will be included in a second financial incentive package are not clear yet, but Senate Majority Leader Mitch McConnell said earlier this week that “kids, jobs and a vaccine” will be a top priority in the next stimulus package.
Josh Smith, an independent wealth management advisor of Strategic Wealth Designers says there may be a lot of back and forth before the concrete details come together on this package.
“In the last stimulus, the US was in a borderline panic reaction mode, they knew something had to get out to the public but didn’t look as closely at each side’s requests as you will see this time,” Smith said. “The House proposed a bill that the Senate hasn’t even considered, so both sides are going to be doing some hard negotiations in the next week to 10 days. There’s also a much better understanding of the virus since the first stimulus – look for this financial boost to be tightly targeted to specific groups and needs that are hurting the most.”
In the last package that went over $2.2 trillion, millions who were laid off received more money on unemployment each week than if they were working in their job position. Smith says look for that benefit to be pulled back, possibly altogether.
“There’s going to be a focus on schools, how do children effectively attend school, everyone knows that in order for many parents to be effective at their workplace, they need either childcare or their children in the classroom,” Smith says. “Significant resources could be placed toward making the classroom a coronavirus free space. A back to work bonus has been talked about and those who have been essentials workers throughout the pandemic may also see a financial stimulus boost. Both sides have to agree, it will be interesting to see how it all plays out.”
For investors trying to make heads or tails with the daily news headlines, Smith advises focusing on building a financial plan rather than the shocking headlines that continue to roll in. He says that if you work with a financial advisor to build out a financial plan for the duration of your life, your asset allocation should be built to withstand the good and more often noticed, bad times in the stock market.
“If you are going through this pandemic right now and you are watching your financial investments slam down only to skyrocket up, then drop back down again, don’t accept these experiences as normal, build an investment portfolio that can soften the roller-coaster ride,” Smith says. “For some viewers, seeing their lifelong investment savings drop 30-40%, that could be $300,000-$400,000 in losses in a very short amount of time. That can change a lifestyle in retirement and no one wants that.”
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