How Much Your IRS Stimulus Check of $1,400 Would Be Worth in 20 Years If Invested In an Index Fund

With the Internal Revenue Service (IRS) issuing $2.4 billion in stimulus payments to about 1 million eligible taxpayers who didn’t claim their 2021 Recovery Rebate Credit, many are wondering what’s the best thing to do with it.

Payments are up to $1,400 per person, and checks are being sent out throughout January 2025. Below, we walk you through how to check if you’re eligible and how much an index fund could gain for you over 20 years should you invest your stimulus check in one.

Key Takeways

• The IRS is automatically sending stimulus payments of up to $1,400 per person to eligible taxpayers who didn’t claim the 2021 Recovery Rebate Credit, with payments arriving via direct deposit or check by late January 2025.
• Eligibility depends on 2021 income thresholds ($80,000 for single filers, $160,000 for joint filers), and taxpayers can check their status through their IRS online account or by waiting for an official notification letter.
• Those who missed claiming these funds can still receive the payment by filing a 2021 tax return by April 15, 2025, even if they had minimal or no income that year.

Why Is the IRS Sending Out the Stimulus Checks?

The IRS is distributing about $2.4 billion in stimulus payments to around 1 million taxpayers who didn’t put the Recovery Rebate Credit on their 2021 tax returns. These payments, up to $1,400 per individual, are being issued automatically to ensure eligible taxpayers receive the financial support they missed during the initial distribution of Economic Impact Payments.

Taxpayers don’t need to file amended returns to claim the credit.

How To Know If You’re Due a Stimulus Check

To figure out if you’re eligible for a stimulus check, review your 2021 tax return to see if you claimed the Recovery Rebate Credit. If you didn’t file a tax return or overlooked the credit, you might still qualify for the payment.

In addition, eligibility depends on income, filing status, and other criterion, such as citizenship or residency requirements. Typically, the IRS notifies eligible individuals, but you can also use the IRS’s online tools or contact their support services for confirmation.

To see your stimulus payment status, use the IRS’ “Get My Payment” tool available on its website.

This tool provides information on whether your payment has been processed, the payment method (direct deposit or mailed check), and the expected delivery date.

How To Invest the $1,400 in an Index Fund

When it comes to investing your $1,400 stimulus check, one smart way is to buy shares in an index fund that can grow your money over time. First, select a low-cost index fund, such as one that tracks the S&P 500 Index or a total market index. These types of funds offer broad diversification across major companies.

Next, open an account with a reputable brokerage or investment platform, and ensure there are no minimum investment restrictions for your chosen fund. Once your account is set up, deposit the funds and place a buy order for the index fund, specifying the amount to invest.

How Much Would You Gain?

Using data from TradingView on the returns for the S&P 500 for the 20 years up to year-end 2024, while reinvesting any dividends, your nominal return (not adjusting for inflation, taxes, and fees) on $1,400 would be 632.57%. This means by 2025, you would have had $10,256.04 in your pocket. Adjusting for inflation, your investment would have grown 342.51% or $6,195.19.

The Bottom Line

The IRS’s stimulus payment rollout offers an opportunity to kickstart long-term savings. By investing the $1,400 in a low-cost S&P 500 index fund, historical data suggests you might grow it to over $10,000 in nominal terms or $6,000 adjusted for inflation over two decades. Whether you choose to invest or use the funds differently, check your eligibility and payment status through the IRS website to ensure you don’t miss out on any unclaimed cash.