72°F
Sponsored by

Lack of Deal in Senate May Cause Volatile 401K Market

SPRINGFIELD, Mo. -- While the government shutdown is in the third week, we are nearing the debt-ceiling deadline. The Republican and Democratic leaders in the Senate may be nearing a deal but the lack of a deal could be an incredibly volatile market for people's personal retirement plans.
SPRINGFIELD, Mo. -- While the government shutdown is in the third week, we are nearing the debt-ceiling deadline.

The Republican and Democratic leaders in the Senate may be nearing a deal but the lack of a deal could be an incredibly volatile market for people's personal retirement plans.

If you're talking about the debt ceiling you're talking trillions of dollars.

Most people are concerned about what a lack of a deal might do to their own, much more modest investments like the hundreds or thousands in the 401(K).

"It doesn't look like there's any investments that will be immune to an overall market downturn," says CPA Alan Nippes.

Nippes says failure to act before the debt-ceiling deadline could be bad news for investors.

"What they should be concerned about is if the debt ceiling is not increased and there happens to be a default on the debt, it probably would have a market wide affect and the value could go down,” says Nippes. “Potentially, significantly depending on how broad and how significant the decrease was to the markets.”

Still, Nippes says investors shouldn't panic.

"Unless an individual is just very, very nervous, or very, very concerned that this is doomsday,” says Nippes. “Taking money out of the 401(K) is probably not the best option. It probably is better to ride out the storm leave the money inside the 401(K) , preserve that tax consequence that probably definitely would be negative and hope for a rebound or a resolution.”

Nippes says at risk are mostly young investors that, in investing aggressively, take bigger chances with their money.

"The downside is when you vested aggressively in these 401(K) assets, they tend to lose the most money when there is a downturn or a market fluctuation,” says Nippes. “If you are concerned about some volatility or an agreement not being reached reallocating the assets to a more stable investment mix, not really aggressive, not growth funds that might preserve or limit the amount of loses if there is a downturn.”

According to Nippes, even if members of Congress don't look out for other people they will likely look out for themselves.

"My guess is a resolution will be agreed upon, if not because of common sense, then because of self preservation on our congressmen would lead them to have some kind of resolution," says Nippes.

People with a 401(K) can make those changes online.

Page: [[$index + 1]]
comments powered by Disqus