Understanding the Fiscal Cliff: What It Means for Your Money

Uncertainty reigns, causing anxiety for investors and jobseekers.

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Sonders says the uncertainty caused by politicians in Washington unnerves Wall Street, which leads to market volatility and uneasy investors. But she cautioned not to make any drastic moves and says there are buying opportunities for long-term investors. Markets should stabilize once the election is over, she says. 

"We don't suggest investors swing their money around based on a short-term view of what the market is going to do," Sonders says. "In the case of U.S. equities, they're quite cheap right now. In this environment, you can get ferocious rallies in the short term."

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Uncertainty tough on recent grads and unemployed. Right now, many people are not concerned with investment but with simply making ends meet. Unemployment remains high, and many new college graduates are struggling to find work. Uncertainty in Washington makes their struggles worse, as businesses are reticent to hire.

Joanne Kerstetter, vice president and spokesperson for Money Management International, a credit counseling and finance advising agency, says people in these situations have to be proactive about managing finances.

"If they've graduated and they don't have a job, it's important that they consider their student loans and have their deferments in place," she says. "The other advice I have is, when you find work, spend only as much as you make. Manage only the dollars you have coming in." 

Sonders adds that Wall Street would reward any positive movement toward compromise. This would improve fortunes not only for new grads and the unemployed, but for investors as well.

"Maybe this all sets up an opportunity," she says. "If a miracle happens [and Congress compromises], it's a huge, positive surprise that is not built into market expectations."