As many already know, Congress is yet again at a standstill for the national budget, making a possibly government shutdown a likely scenario in the coming weeks. With the House threatening to defund Obamacare, the chance of a compromise between the Republican-led Congress and our Democratic president are low, but how does a shut down directly affect investments?
The potential for a government shutdown has made investors antsy. Many are attempting short-term changes to their investment portfolio. However, a senior financial planner from T. Rowe Price, Stuart Ritter, doesn’t think investors should make such immediate changes without knowing what is actually happening.
Ritter told CNBC “There is always something to potentially react to. But what helps in the long term is putting together an asset allocation plan and sticking to that. It’s not emotionally satisfying in the short term, but it is in most cases more financially satisfying in the long term.”
What do investment analysts like Ritter and Scott Halliwell, a USAA certified financial planner, recommend instead? It’s simple — planning ahead with an emergency fund.
“Generally speaking, our guide to folks would be, you don’t want to use an event like this as a driver of wholesale change in your portfolio,” Halliwell said. He added that a better idea is to “spend less money than you earn and have a good emergency plan in place.”
Are you an employee of the government, or member of a government-run agency like USAA or First Command? How are you taking control of your finances during this uncertain time?