NPR Business Story of the Day Podcast just aired an episode on what debt ceiling could mean for your retirement plan. Basically, nothing much if we don’t need the money for a decade or more. It can be short term dip, but it should recover before we need the money. Just don’t panic sell. However, for those who need the money now or soon, diversify, diversify, diversify. For example, have enough cash or equivalent for 3-year of living expenses or more. This way, they are not forced to sell bonds or stocks during market crash.
Perhaps, it is good opportunity to buy the dip if Biden Administration and Congress can’t reach a deal. This time is different. The House is controlled by a small group of right-wing extremists whose aim is to destruct and destroy. It took House speaker Kevin McCarthy 15 ballots to get elected by the house representatives from his own party. That set a record.
Biden wants to stand firm and refuse to let Republican to use debt ceiling as a threat to the US economy to negotiate. McCarthy doesn’t have much power over his own party. Perhaps they will kick the can down the road. Let’s see how it plays out.