What Brexit Could Mean for Investments

Posted on June 1, 2016

It will be 24th June when the Brexiteers sober up, probably still fully clothed from the night before and no doubt feeling a little ropy as they pour the dregs of champers down the sink. However, it will only be after they look at their investment portfolios that they will suffer the mother of all hangovers.

Initially there is no doubt investments will fall in value, equities in particular will suffer, as markets start to take into account an uncertain future. Hangovers are temporary but what about the long term?

A strong united Europe wishing to punish Britain for leaving could make life very difficult indeed but Europe is not strong and it is certainly not united. Rather than remain united more members of the EU may be wanting to take the UK route.

With less EU regulation a leaner more competitive economy with new exciting trade deals in the UK will flourish…… maybe, the fact is no one knows. This is a real problem for investors. So what are the options?

Sell everything?

Well this would protect you from the falling markets but if the Brexiteers lost selling now and reinvesting later would be the same as making a loss.

Hold on for the ride?

Investments set up properly, diversified across a large range of assets and geographical sectors will mitigate some risk but you’re still going to feel some volatility.

The most important thing you can do is consider your investment objectives, if they are short term (you need the money in less than 5 years) then don’t invest until after the referendum. However, if you’re a long term investor then a bit of volatility did no one any harm.

For clients needing income, I would suggest equity income might be a bad idea, until after the referendum, however, people using fixed interest to create income should be fine for the most part.

With a little bit of guidance and forward planning, there should be no need to worry about a Nigel Farage under the bed.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.