While some of that talk may be setting the stage to pass the blame for weak results, "it certainly sends a message too that businesses are sitting on an awful lot of cash, that cash isn't being used to hire people or to expand because of the uncertainty of political policy." he says. "Its not just the debt, it is regulatory issues, tax issues and on and on and on. Our concern is that we have a political, Washington drag that could go on for well past Tuesday and the debt ceiling being raised." Amid the uncertainty, Phillips still says that people should continue to save and "absolutely keep putting money into" 401(k)s and IRAs. "Having a capital base always creates options, it creates flexibility," he says. "You never want to back away from that." While some may back away from stocks, and devote more to bond funds and the like "if they are really scared," Phillips maintains that "there are some decent values in the equity market." "Many pension plans have an equity income fund or a dividend-focused fund," he says. "I think that is probably a pretty good place to be accumulating positions today and not be thinking about the volatility if it is money you are not going to be using for the next five, 10, 15 years or so, until you are at that stage of retirement." "There are some great companies that have consistently paid dividends and have been increasing dividends even over the past couple of years that are in these funds," Phillips adds. "So if you can get 3% or more on a dividend that should be growing over time versus 3% in a U.S. Treasury that comes with some volatility, I think its not a bad place to be looking if you want to store some savings these days, as long as it's not money you are going to need for the next couple of years." Phillips stresses that volatility and risk are not synonymous, especially for younger investors. If price is going down, you are getting more shares and dollar-cost averaging works to their advantage. Unfortunately, it is much more difficult for people on the second half of their career. "Within five or 10 years of retirement it becomes much more emotional," he says. "The contributions are a smaller percentage of the total pool. In those cases, it is OK to hold some cash for a while. You don't have to have every percentage point increase in value, because if you hold in cash, you are preserving value and can just wait for a better day to take a position." Thoughtful portfolio construction can manage risk and add significantly to long term growth, says Eric H. Zoldan, senior vice president of investments at JHS Capital Advisors in New York. He adds that diversification and rebalancing "enhances growth by reducing volatility." Even amid the U.S. debt crisis and the dire situation in Europe, investors need to avoid knee-jerk reactions to media headlines and the emotions they stir. "Should you change your financial strategies? No, you need to have a good investment policy to start with," Zoldan says. "People inevitably do the wrong thing. You have to be stone cold and stick to your strategy and not pay attention to the fluff." "It is as simple as walking into a room," he adds. "If everybody in the room is talking about how badly the market is doing and how much money they are losing, you know that you are getting close to the buying opportunity. When you walk into a room and everybody is talking about how much money they are making, you know it is time to diversify out of whatever asset classes they are discussing. Those are the extremes." -- Written by Joe Mont in Boston. >To contact the writer of this article, click here: Joe Mont.