Leaving the EU is unlikely to change your investments or pension policy. However, investments of any nature carry a risk and values can go down, as well as up.
We have already seen periods of market volatility since the referendum vote in June 2016 and it’s possible we’ll see more before and after the Brexit date.
Investments after Brexit
Will the value of my policy change?
Volatility is an inevitable part of owning shares and it can make investors nervous. The main issue that can cause values to fall is market sentiment. If lots of people worry about the outcome and start to sell then values could fall. However, the basic principles of long-term investing remain the same.
A financial adviser can help you to understand the risks and build an appropriate portfolio individual to your needs. Setting and maintaining a strategic asset allocation with a mix of shares, bonds, cash and other investments are amongst the most important ingredients to long-term investment success.
By including different assets which have historically moved in different directions and by different degrees, means that even if a portion of your portfolio is declining the rest of your portfolio is more than likely to be growing, or at least not declining as much.
The asset allocation should also be aligned to your investment time frame, financial objectives and the level of risk you feel comfortable taking.
During any period of change, it’s important to take professional advice from an independent financial adviser, who can talk you through the available options.
Sudden market volatility may have a bigger effect on customers who take money out of a policy. For example, if you plan to buy a new car in the next year, but you were invested in a fund that’s dropped significantly in value, you would get less money. In situations like this, it is important to ensure you have sufficient cash available at short notice for any planned expenditure over the short-term, thereby allowing you to leave the investments to recover in value.
For clients taking an income from their pensions or investments, you should seek professional financial advice, if you need help to decide whether the amount of money you are currently taking should be adjusted during volatile periods.
Regular monitoring of your portfolio to review your investment mix is an important stage of investing. A review allows you to revisit your objectives, financial circumstances and risks and decide if any changes need to be made and to see if you are still on track to meet your goals.
How Nelsons can help
At Nelsons, our expert team of Independent Financial Advisers can provide advice and talk you through the options available to you.
Zoe Till is an Independent Financial Adviser in our Wealth Management team. If you would like any advice in relation to the subjects discussed in this article, please get in touch with Zoe or another member of the team in Derby, Leicester and Nottingham on 0800 024 1976 or via our online form.