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Investors have started to hunt for how to prepare for the debt ceiling deadline since U.S. Treasury Secretary Jack Lew put a date on the day the country will hit its borrowing limit.
"If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in history," Lew wrote in a letter to Congress sent Sept. 25, when he noted that Oct. 17 is the day we hit the debt ceiling.
Come Oct. 17, the Treasury expects cash on hand to have dwindled to $30 billion. That withered amount is only half of the $60 billion the government typically spends daily. It threatens the government's ability to pay the $55 billion Social Security, Medicare, and military benefits due Nov. 1.
Since May, the Treasury Department has been operating under "extraordinary measures," including delayed payments to pension funds, to keep the nation operating under the debt limit.
Now the government shutdown battle has become intertwined with the debt ceiling debate, making the fight even messier than it was before.
Since our government's budget antics can trigger increased market volatility, you need to prepare your portfolio for the Oct. 17 debt ceiling deadline. Here's how you can ride out the storm by making these "Washington-proof" moves today.
How to Prepare for the Debt Ceiling Deadline
There are a few ways for you to avoid the financial quagmire Washington has created.
First, look at increasing yield in your portfolio.
As the Money Morning investment team continually reminds readers, dividend stocks hold up well in all kind of markets, and their stalwart performance is especially crucial in uncertain markets.
By investing in companies that pay a dividend, shareholders not only receive income from regular cash payments, but they are also typically investing in quality companies that have the potential to grow profits and share prices.
Data shows that dividends comprise a significant part of an equity investor's total return. Since 1926, dividends accounted for more than 40% of the return of the S&P 500 Index. Their gains outpace that of non-dividend payers, as the accompanying chart illustrates.