After months of fervent campaigning, the EU referendum took place in the summer of 2016. Some four and a half years later, the Brexit transition period ends on 31 December 2020.
Exactly what it will mean for the country is barely any clearer now than it was back when the vote was held, such is the level of uncertainty that remains.
But in the same way that the government and multinational corporations have been spending huge amounts of time and resources into putting post-Brexit plans in place, financial advisers have also been following events closely to ensure the advice we give you is up to date and in your best interests.
Here’s your guide to some of the things that might change post-Brexit, and what you should focus on now in order to prepare.
Brexit might change your retirement and investment plans in the short term
The financial advice we give you is based on your personal circumstances and aspirations for the future and that won’t change. But your short-term plans might.
Many UK pensioners retire abroad each year, chasing better weather, a change of lifestyle, and reduced costs of living. Recent research from Canada Life, however, suggests that 46% of over-50s who planned to retire abroad are now reconsidering.
There’s the possibility of visa requirements to consider and checks on the reciprocal agreements in place between the UK and your chosen retirement destination. Implications for your National Insurance, healthcare, and access to future State Pension rises will all need to be considered too.
Likewise, Brexit might impact investment opportunities, though what that impact might be likely depends on how UK investments perform post-Brexit.
Legislation, tax, and VAT are set to change, and they are likely to become more complicated. Without definite guidance on any VAT agreements already negotiated, it’s difficult to predict the impact of moving into a market of multiple VAT jurisdictions.
We can though, keep up to date with announcements as and when they occur – as we do with all regulatory and governmental changes – to ensure that the advice we give you is the best advice for you and your needs at any given time.
Three things to focus on as Brexit nears
The impact of Brexit is hard to predict but you can lessen its impact by remembering the following three key things:
1. Focus on your long-term plan
Short-term fluctuations in financial markets are normal – even when their cause is not. When the coronavirus pandemic led to volatility in the stock market back in March, our advice was to stay calm and stay invested.
It’s hard to predict the impact Brexit might have but in terms of your investments, the advice remains the same. Investing is a long-term proposition. Whether you’re investing for your grandchildren’s education or your own retirement, a lengthy time frame allows you to ride the storm of short-term dips.
If you’re closer to the end of your investment period – your grandchild is nearly 18 or your retirement is close – the impact of a short-term dip might be more pronounced. You’ll need to be sure that you’re not unnecessarily exposed to market volatility.
2. Check your investments align with your attitude to risk
Whether you’re close to the end of your desired investment period or not, it’s always worth checking in with your investments and ensuring they still align with your attitude to risk.
Risk profiles are individual to all of us and they are a constantly evolving thing. If you found yourself worrying in March, the thought of future Brexit turbulence might be a concern too, and could signal that it’s time to lessen your levels of risk.
If you’re reaching your investment goal, you should also think about consolidating the gains you have made.
3. Could you diversify more?
One way to decrease your investment risk is to move into more conservative funds. But a diversified portfolio also helps you to spread risk.
By holding investments across asset classes, sectors, and geographical regions you’re protecting yourself against a fall in one area. Short-term volatility might cause a drop in one area while investments held in a different region might perform better and offset the loss.
Check-in with your portfolio and rebalance it if necessary or speak to us for advice.
Get in touch
As Brexit nears, a large degree of uncertainty remains. If you have any concerns about your retirement plans or investments speak to us or schedule a review.
We can help you decide if your current exposure to risk is suitable for you, if your portfolio could be more diversified, or if your retirement plans are still on track.
We can help you concentrate on the long or short term and provide advice on what Brexit might mean for you.
If you’d like to discuss how Brexit, investment volatility, or any other concerns may affect your finances, please get in touch. Please email email@example.com or call 0115 933 8433.
The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.