The U.S. government shutdown may dominate headlines, but history shows markets tend not to take much notice — with long-term returns largely unaffected. By staying diversified and focused on the bigger picture, investors can ride out political noise and keep their money working towards long-term goals.
A US government shutdown* has been triggered after a deadline to reach a funding agreement before the start of the new fiscal year (1 October) came and went without a deal.
Noisy headlines like these can feel unsettling, but history shows that markets usually take them in stride. While shutdowns can cause short-term noise, they rarely derail the bigger picture for long-term investors.¹
Chip explains: What is a government shutdown?: In the U.S., Congress has to approve funding for government operations. If lawmakers can’t agree on a budget before the 1 October deadline, parts of the government temporarily close until a deal is reached.
What might happen in the short term?
- Data delays: Key economic reports could be postponed, creating a temporary “blind spot” for analysts and traders.
- Government-linked sectors: Contractors and defence companies may face small payment lags, but these tend to be resolved once funding resumes.
- Market sentiment: Expect some short-term jitters and reactive headlines in the news cycle, but past shutdowns haven’t caused lasting damage.
Why investors don’t need to panic
The most important thing to note is that history is on your side. U.S. markets have been largely unaffected by previous shutdowns, with long-term returns back on track once political gridlock passes.2
Diversification also plays an important role. By spreading your money across different regions, sectors, and asset classes, you avoid being overly exposed to temporary political standoffs like this.
And most importantly, while headlines can spark short-term nerves, it’s worth remembering that the bigger picture matters far more than these short-lived disputes, so stick to the plan.
How Chip helps you stay steady
At Chip, we keep investing simple and diversified. Choose from over 40 investment funds – offering clear, curated choices without overwhelming you with thousands of options.
If you’re investing for the long term, the message is clear. Stay the course, let diversification do its job, and keep your goals in focus.
Head to the ‘Invest’ tab in your Chip app and see how you could put your money to work today with a tax-free Stocks & Shares ISA or General Investment Account.
Important to know: When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than your original investment.