How the fiscal cliff will affect you

OVERLAND PARK, Kan. - Talks between President Barack Obama and Congress about a deal to avert the so-called "fiscal cliff" are all but frozen.

If lawmakers are still at an impasse on Jan. 1, $600 billion worth of tax increases and spending cuts will automatically be triggered.

Economists surmise that could lead the nation into another recession, a market meltdown and investors worrying what to do about their money.

Investment advisors suggest thinking about taking action on your investments now.

Chris Butler, a register investment advisor in Overland Park, Kan., said now is not the time to be investing in stocks or taking risks until Congress decides on a deal.

"Anytime politics trumps the economy, you've got a speculative market," he said.

Butler added now would be a good time to turn some of your investment to money markets or cash. That way, if the stock market dives when the nation drops over "the cliff,"  your money will not go down with it.

Having cash on hand will also allow you to have money available to invest in cheap stocks if there is no agreement before the first of the year.

"What will you buy unless you have cash on hand," Butler said, "ready for a potential opportunity?"

Another reason to turn your big stock winners into cash? You can lock in the lower 15 percent tax rate as opposed to potentially as much as 45 percent next year.
         
Experts suggest if you are 60 years or older, turn your current investments into low risk ones right now.
          
Younger people should leave their 401Ks and mutual funds alone, as they will have more time to recover.

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