What to do and not do with your investments & pensions after the Brexit vote

Jul 22, 2016 | Tony Byrne's View

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With the United Kingdom having now decided that they would like to leave the European Union by a close margin of 52% to 48%, we now need to look forward at how this will affect us all. Regardless of personal opinion and despite how you may feel the result should have ended, this is a first of its kind in history. We are in unknown territory and many investors are extremely concerned as to how the result of the Brexit will affect their pensions and investments.

Across the country financial advisers and wealth managers such as ourselves at Wealth and Tax Management have had to face the realisation that no matter how the vote goes, it would affect our client’s investments in some way or form. Naturally we have a strategy in place, but what about everyone else? What should you do in the wake of the EU Referendum?

Well, despite what you hear in the media concerning the performance and worries of the stock market, if you have the correct investment strategy in place, cashing in your investments now in order to reinvest when markets are higher is probably not the best idea. Do remember; your pensions and majority of investments should be there for the long term. It is natural to see fluctuations in their values so do not focus on today’s value. Do bear in mind that when the value goes down you can use your income earned from your investments or regular contributions to purchase more stock/units at a cheaper price. If you reinvest your money when the markets are higher then you are purchasing less stocks but at a higher price. The saying “if you can see the train you have missed it already” really applies to this scenario.

Do also make sure that you spread your investment risk by diversifying what you invest into. There will always be winners and losers in the stock market, so by investing in just one or two funds dramatically increases your exposure to losing your hard earned cash. By investing across a broad range of investments you reduce this exposure and it will hopefully level out the unknown changes that will be felt by the Brexit result.

Lastly, make sure to check up on your investment and pension providers as to how they are reacting to the Brexit. They will most likely have published their own information so check on their websites to keep up to date on what goes on. You will have noticed in the news recently that Standard Life and Old Mutual have each suspended property funds because of illiquidity. Do not worry though as these providers will have temporary processes in place to continue their day-to- day activities so you probably will not be vastly affected.

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.

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