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What Greece's debt crisis means for average investors

 
Customers line up to use an ATM at a closed bank in Athens, Greece, on Tuesday. The government has shut the banks and restricted cash withdrawals.
Customers line up to use an ATM at a closed bank in Athens, Greece, on Tuesday. The government has shut the banks and restricted cash withdrawals.
Published June 30, 2015

Greece caught many investors off guard this past weekend. It closed banks for a week, it announced a referendum that could dictate its future in the eurozone, and it may be nearing default.

That caused global and U.S. stock markets to plunge Monday. The Standard & Poor's 500 index dived 2.1 percent, its biggest drop this year, though it managed to post a small gain Tuesday.

What's happening in Greece is complicated, and how it will play out isn't clear, leaving amateur investors with plenty of questions. Here are a few.

How much will my investments be affected by what's happening in Greece?

Markets and economies around the world are closely connected, but investors see the United States as a relatively safe place to invest, said Sameer Samana, a strategist at Wells Fargo. Many U.S. companies have tried to become less dependent on Europe, he said. Effectively, that means investors are betting that the U.S. economy is strong and that it won't be hit too hard by Greece's ripple effects, said Joseph Quinlan, head of market strategy at U.S. Trust.

Should I be worried as a long-term investor?

Probably not.

Quincy Krosby, a market strategist at Prudential Financial, urges investors in the market for the long haul to look past Greece's woes. "This too shall pass," she said.

But it is a reminder that getting into international markets can be a risky endeavor, said Julian Emanuel, a strategist at UBS, who is advising his clients to be financially and mentally prepared to make moves when the market retreats.

What if I'm only in the market for the short term?

Investors who need to cash out soon — to buy a home or send a child to college, for example — should have most of their portfolios in low-risk investments already, so hopefully the market's fluctuations won't have much of an impact. Monday's downturn, which cut across industries, shows that a jittery market can take a wide range of stocks with it.

Are there any upsides?

Monday's slide saw declines across sectors, but analysts say industries that focus on a U.S. market should be relatively safe — and some safe companies may be getting caught up in a broad selloff.