With the stock market hitting record highs, it’s a smart move to think about how you can enjoy some of your profits. After all, owning stocks doesn’t bring any joy or use unless you cash in on them from time to time. I started investing in stocks back in 1996, during my first year of college, with the aim of getting rich. But over time, my perspective changed. I wanted to learn about the stock market to land a job in finance.
As time went on, the idea of getting rich from stocks lost its appeal. My investment goals became more specific, especially after losing a significant amount of money in the stock market crashes of 2000-2003 and 2008-2010. These losses taught me the importance of selling stocks once you’ve made enough to buy what you want. So, what are you saving and investing for?
Here are some ways you can spend your stock market gains:
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Fertility treatments: If you’re trying to have a child, you might consider using some of your stock market gains to pay for fertility treatments like egg freezing or IVF, which are often not covered by insurance and can be quite expensive.
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Your child’s college education: Paying for college can be a major stressor for many parents. Why not use some of your stock market gains to alleviate some of that stress? When it’s time for your kid to go to college, use your 529 plan, Roth IRA, or UTMA to pay for their education.
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A house you’ll live in for 5+ years: One of my favorite ways to spend stock market gains is by buying a house. Unlike selling stocks to pay for something that no longer provides a potential return, a home does.
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Remodeling your home: If you’re not looking to move, consider using your stock market gains to remodel your home. This can also increase the value of your home.
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A mid-life crisis car: Stock market gains can feel like "funny money". Why not turn some of that funny money into a splurge like a mid-life crisis car?
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A sports/health club membership: Mental and physical health are more important than money. If you have stock market gains, consider using some of them to join a private sports club.
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Charity through a donor-advised fund: Consider donating some of your stock market gains to charity through a donor-advised fund.
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Pay off annoying debt: Pay off any outstanding debts like high-interest credit cards, auto loans, or student loans. This is like giving yourself a guaranteed return equal to the interest rate and frees up cash flow.
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A new fancy wardrobe: As someone who likes to wear inexpensive comfy workout clothes, owning a fancy wardrobe is foreign to me. However, now that I’m mingling with other parents more often due to my children’s school events, I should probably get some new clothes.
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Your loving parents: If your parents are still around, it’s worth spending some of your stock market gains on them. Being a parent is the hardest job in the world for the first 18 years. But we tend to take our parents for granted over time, especially if we are not parents.
After the stock market’s dispiriting losses in 2022, we should revel in our current gains—who knows their staying power amid an unknown future. Rather than endlessly chasing more or fretting through the ups and downs, let’s appreciate windfalls when they arrive.
Occasionally taking chips off the table to fund lifestyle desires maximizes the purpose of investing. Here’s to celebrating gains as we go!
How are you spending your stock market gains? The more ideas the merrier.
If you still feel the urge to invest and potentially make more money in the future, continue to dollar-cost average into the S&P 500, real estate, and private growth companies.
To invest in real estate more strategically, check out Fundrise. Fundrise runs over $3.3 billion across multiple funds that primary invest in the Sunbelt region where valuations are lower and yields are higher. I expect the real estate market to rebound as mortgage rates come down.
To invest in private growth companies, check out the Innovation Fund. The fund invests in private companies in the artificial intelligence, prop tech, fin tech, and datacenter space. Private companies are staying private for longer, meaning more gains are accruing to the private investor.
