Hasn’t Brexit been a spectacle?! Things have calmed down a little since April when we were, once again, granted an extension after failing to come to a deal. But, who knows what the future may hold? And in truth, that is kind of the point. Politically and economically we are in unchartered waters; there isn’t a historical equivalent. Nobody really knows what the outcome and subsequent consequences, especially financially, will be.
It’s human nature to be apprehensive in unknown circumstances, especially when they are beyond our immediate control. One of the questions we’re most often asked is; ‘how can I Brexit-proof my portfolio?’ The impact on markets is an unknown. Accurately predicting a market downturn as a direct result of Brexit is virtually impossible. But, the truth is, volatility and market corrections have happened before and they will happen again. When, and to what extent, is unpredictable.
The key to staying on track with your financial plan is to remember why you’re investing in the first place. It’s very likely to be a long-term goal; kids school fees or your retirement, perhaps. Your goals and ambitions are at the heart of your financial plan; they are unlikely to change as a result of Brexit.
Avoid rash decisions
No matter what stage of life you are in, making a rash financial decision based on external influences and media hype can be more detrimental to your security than doing nothing at all. Your portfolio will already reflect your attitude towards investment risk and capacity for loss, and it will be rebalanced to remain within your tolerances at every review, if necessary.
If you are approaching retirement, don’t let Brexit uncertainty distract you or divert you from your original plans. If markets do decline you only crystallise a loss (and make it ‘real’) when you sell up and withdraw your investment. History has demonstrated that remaining in the market, unless you are spectacularly lucky with timings, is often the best thing to do. It’s time in the market that’s important, not attempting to time it.
If you’re in the early years of saving, or have a large lump sum to invest, there is no good reason to sit and bide your time. With a bigger sum of cash don’t defer it entirely, drip feeding regular monthly contributions over time can be the best way to smooth out potential volatility. If and when markets do go down, units are cheaper, so you’re also getting more bang for your buck!
What better way to understand your wealth in the short and long term than a graphical representation? Cashflow planning is a powerful tool used in the right hands; we can take into account income, expenditure, investment growth and inflation. Most importantly, we can plan for unexpected events, from the most severe such as premature death, or we can model various scenarios as a result of a temporary market downturn. It’s not all doom and gloom, we can also plan for lump sums in life, such as an inheritance or the sale of a business.
When you’re in retirement, we can also plan the most tax-efficient way of withdrawing income from various sources. But, importantly, stress testing your wealth to provide an appropriate income throughout life (and beyond if you want to leave a legacy) can give a real confidence boost.
We are here to help secure your financial future. A big part of that is clarity and reassurance in your financial decision making, no matter what the political and economic landscape looks like. We can clearly and simply demonstrate your wealth over time, with you and your family’s aspirations at the heart of your financial plan.
At Sovereign we are proud to be Chartered Financial Planners; the ‘gold standard’ of financial planning which positions our firm amongst the UK’s leading practices. You can be confident that you will receive the best possible advice, service and support in all circumstances. If you still have any financial questions or concerns regarding Brexit, give us a call. If you’d like to review your current financial situation and see how that translates to your future goals with cashflow planning, please get in touch.