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Effect of Government Shutdown On Your 401K

With an already fragile United States economy, what kind of effect will a government shutdown have on your 401K?
MEMPHIS, TN (localmemphis.com) - With an already fragile United States economy, what kind of effect will a government shutdown have on your 401K?

Many are keeping an eye on the markets and their investments and wondering if the shutdown will hurt them.

We checked around Memphis and found David Waddell, Chief Investment Strategist and CEO of Waddell and Associates.

"The point is, 401K investing is by definition long-term investing and these little disturbances in the greater scheme of history are immaterial," Waddell said. “The longer that shutdown drags on, the bigger impact it will have on the economy."

It's already having an impact on paychecks of nearly 800,000 government employees.

Many will be furloughed.

"It could have some impact on wages. It could have some impact on certain industries calibrated to government. But overall, at least as history has shown, we got through these periods unscathed," Waddell said.

He says back in 1996, when the government shut down for 21 days, the S&P 500 performed worse a week prior at negative point 2%, then bounced back.

"But even in that instance, a month later the market was 4% higher," Waddell said.

And if history holds true again, maybe things will get back on track.


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