Photo (cc) by archer10 (Dennis)
The Internet is aflutter with speculation in the wake of Greece’s vote on Sunday against outside financial aid.
What the vote means for Greece remains to be seen. But experts say Americans shouldn’t be overly worried about how the weekend’s events will impact their investments and retirement nest eggs.
In the referendum, Greeks voted against accepting an offer of international financial assistance that would have required the struggling country to adopt greater economic austerity measures.
The vote followed Greece’s missing a debt payment to the International Monetary Fund last week, thereby defaulting on an IMF loan and becoming the first developed country to do so, according to the Wall Street Journal.
As a result, Greek banks are expected to run out of cash as early as today, the Washington Post reports.
As we reported Friday, some Greek banks shut down after the default. Greek citizens were limited to ATM withdrawals of 60 euros (about $67) per account.
Although tourists don’t have the same limitations, many ATMs in Greece ran out of cash last week. (To learn more, check out “Going to Greece? Load Up on Cash and Keep Your Eyes Open.”)
Experts generally agree that American investors have little to worry about regarding Greece’s financial troubles.
CNN Money reports that the U.S. stock market “could very well freak out” in the wake of Greece’s “no” vote, which means Americans could see their 401(k) plans or other investments drop. But such ripple effects are expected to be short-lived.
CNN lists several reasons why the vote in Greece should have a limited effect on the average American investor. They include:
- Greece makes up 0.3 percent of the global economy, and most investors have avoided the country since it faced possible default five years ago.
- Greece owes money to big institutions rather than private banks.
- As of the end of 2014, foreign investments in Greek banks totaled $46 billion — down from $300 billion in 2010. That debt and the risk associated with it is spread out across various creditors.
The impact on the larger U.S. economy also is expected to be modest. Julian Jessop, chief global economist at Capital Economics, tells Business Insider that the “risks of contagion to the U.S. economy and financial system are small.”
The Washington Post’s Wonkblog opines that in terms of impact:
Our banks should be fine. Some hedge funds might fail. And the stronger dollar (the flip side of the weaker euro) should make our exports a little less competitive overseas. And that’s it.
Some experts believe that any stock decline associated with the Greek vote will be good for American investors over the long term.
Daniel Morris, global investment strategist for financial services firm TIAA-CREF, tells USA Today that he believes any downturn “is essentially a buying opportunity.”
Were you surprised by the Greek “no” vote Sunday? Are you worried about any effects it could have on American markets? Sound off in a comment below or on our Facebook page.