We are living in interesting times with a country divided, on the cusp of leaving the European Union (maybe!), Parliament being suspended and protests on the street.
You may be (with good reason) worried about your savings and investments.
So should you be making changes to your investment strategy? Is now the time to ditch UK investments?
What to do about the politics
The simple answer. Nothing.
By making changes to your investment strategy based on politics you are essentially trying to predict what happens next. If Brexit has taught us anything, it’s that politics is incredibly hard to predict. Make the wrong call and you could lose out financially.
Let’s say we leave the EU without a deal and the economy suffers initially. The UK has been through worse. Think back to Black Wednesday during the early 90s, the dot-com bubble at the start of the 2000s and the more recent financial crisis in 2008.
Each time stocks markets have recovered and gone on to be worth more than before.
Let’s say we end up with a few changes of government over the next few years. Did you know that the UK stock market has risen over each period a party has been in power from 1963? It means regardless of who’s in power, Labour or Conservatives, the stock market has finished up higher at the end of each term and delivered great returns. You can read more about how different governments affect your investments in my previous article here.
Investment research provider Morningstar have done an excellent short paper on how to deal with Brexit here.
So the only time you should be making changes to your investment strategy is if your financial planning objectives have changed e.g. You are approaching retirement, you have a new child, you have received an inheritance etc.
Having read the above if you are still worried then I recommend doing the following:
- Switch off the press.
- The news media love negativity, it sells better than happy stories.
- They will try to sensationalize everything.
- Take a break from it.
- If you had switched off the news in 2007, left your investments alone and switched it back on again in 2010 your investments would have done better than most!
- Go against the crowd
- You win at investment by not following the crowd.
- Buying when others are selling as stocks will be cheap.
- Sell when others are buying as stocks will be expensive.
- Investment more regularly
- If stock markets fall then that is a good time to buy, as stocks will be cheaper.
- Drip feed your money in so you can always take advantage.
- No investment returns are ever going to match the impact of just saving more.
- Remember there’s a bigger world out there
- You should always be diversified across the globe.
- The UK only makes up around 5% of the world’s stock market so other investments across the globe can have much more of an impact and reduce risk.
Are you unsure on your investment strategy? Do you feel now is the time you need to make a change?
If you want to get this right then why not take advantage of our free 15 minute call. You can speak to a Chartered Financial Planner who will listen to your objectives and guide you in the right direction.
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.