By Anna-Louise Dearden, Editor of Muddy Stilettos, Northamptonshire.
Whether it’s a short or long term financial goal, saving is often a key part, but do we need to think about our cash before Brexit?
Yep, Brexit. Yawn. We’re all tired of hearing of it but, with the “big day” looming, there are still some personal decisions we’re unsure about. I recently had some very smart financial advice off Rachel Efetha from Anstee & Co and figured if she could deal with my poor planning and make some semblance of a financial portfolio, she’d know a bit about how we can deal with our personal investments before Brexit. Here’s what she had to say…
It’s an uncertain time and my clients are asking me more and more if they should cash in their investments before Brexit and my answer to them is another question ‘what is the purpose of your investments?’.
Short term goals
£30,000 and planning to build an extension later on in the year? This is a pretty short-term goal and although I do not have a crystal ball, I expect volatility during 2019.
There are another two questions to consider:
- If markets fall and you lose money, would you be happy to defer the extension on the house until markets have recovered?
- If markets fall and you lose money, would you be able to/be happy to consider a remortgage to pay for the extension on the house?
If the answer to both these questions is ‘No’, then cash in your portfolio now to guarantee that the objective at the end of the year is met. Once out of the market, you possibly might consider Premium Bonds until you need it and you never know, you could be lucky!
If the answer is yes to either of these questions, then sit it out and ride the volatility until the money is needed.
Long term goals
On the other hand, if you’re age 45 with a pension portfolio of just over £100,000 and not planning on retiring until at least 60, this is a much longer term.
Over the past 15 years, the Financial Times Stock Exchange 100 has increased by 56%. Putting it another way, if you invested £1,000 in January 2004, it would now be worth £1,560. The path has been rocky over those last 15 years with a crash in 2008 and a dip in Jan 2016, but overall the markets have gone up.
Therefore, there’s a long time to iron out the short-term peaks and troughs so remain invested. Markets do not like uncertainty and that is the number one word I would use to describe Brexit! Once a deal/no deal has been finally reached, it is very possible that the markets will react positively to the news and we will see a very quick rally, which would be missed by those, not in the market!
So, the answer to the question? It depends on your term and how flexible you are willing to be with your objective. Still unsure? Get in touch with Rachel at Anstee & Co and talk through your concerns. Whether it’s planning for investments, pensions, later life, inheritance tax, wills, insurance, or mortgages, she’ll be able to help (she’ll assess your risk category as she did me; VERY interesting)! And you don’t have to be ‘rich’ to get financial advice, even a small amount of savings can be invested wisely. If only the MPs could have sorted Brexit as effectively!
This article first appeared on the Muddy Stilettos website on 27th February 2019.