The latest government shutdown that began on Oct. 1 may reasonably raise stress levels for many Americans. But that doesn’t mean it’s a good time to make money moves like changes to your investment portfolio or major revisions to your long-term financial plan.
“It’s common for people to second-guess their financial decisions when uncertainty arises, but reacting out of fear often causes more harm than good,” Brent Schutte, chief investment officer at Northwestern Mutual, says. “While the current shutdown could likely lead to market volatility, investors can take comfort in knowing that the market has recovered from previous government shutdowns over the long term.”
Whether your fears are related to the shutdown or other more personal stressors, it’s a good idea to wait until your emotions are more regulated to make big money decisions, says Aja Evans, a financial therapist.
“If you are feeling super anxious, if you’re having a really hard time, if you’re just like, ‘What’s going on? I am unraveling.’ Do not move your money at all,” she says.
Here’s what she suggests instead.
‘Complete the stress cycle’
Evans’ first piece of advice is to find a coping mechanism that doesn’t cost you anything. “Spending money sometimes feels really good,” she says, but that good feeling generally doesn’t last and could even put you in a worse financial situation.
Going outside, spending time with friends and loved ones, watching something that makes you laugh or taking a long shower are examples of free activities you can do to take your mind off your anxiety so you’re in a better state of mind to make financial decisions.
“Where people are really struggling and really worried and really scared, it can be easy to feel like they need to reach for something immediately, but that’s why it’s so important [to not move your money],” Evans says.
She encourages her clients to “complete the stress cycle” before they decide action is necessary — or not— for their financial wellbeing. That means taking some deep breaths or doing any of the other aforementioned de-stressing activities to get yourself back down to a “normal” level of stress so you can see clearly and make better decisions, Evans says.
“I don’t want anybody to move their money because they think they’re in crisis when it may not be as huge as it feels to them in that moment,” she says. “A lot of times when we do that, we are forgetting the long-term impact of that quick change that’s just trying to make us feel better in the moment.”
“I want people to be regulated, be calm, be centered when they’re moving their money,” she adds.
‘Avoid making any knee-jerk moves’
So far, the government shutdown hasn’t led to major stock market shifts, but that could change. And “because the ultimate outcome of shutdown negotiations is uncertain, it’s risky to make changes to your investments based on expectations of how things may play out,” Schutte says.
As with other uncertain times, he recommends investors stay the course and “avoid making any knee-jerk moves with their money,” in order to protect their long-term financial well-being. Even if the market takes a dip, historically it has recovered. That’s why experts generally say it’s wise to wait market volatility out, or to avoid checking your investment accounts altogether.
If you think you do need to make changes to your financial plan or need some help figuring out what changes to make, it’s a good idea to consult with a financial advisor “who can help you make adjustments that will serve you well over the long run,” Schutte adds.
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