he referendum result has divided the country and as we collectively try to understand what Brexit means for our country’s political and financial future, many fear the financial implications of leaving the EU.
Facebook feeds and news pages are filled with outbursts of shock and hard hitting headlines. The value of the pound has dropped as has the FTSE 100, fuelling the fire. However, the general feeling in the financial industry is don’t panic just yet, the FTSE is still above its February low and most businesses and banks have stated it is largely ‘business as usual’.
the market’s 10 best days over the last 20 years have occurred within two weeks of the 10 worst days
As a pension and wealth management specialist, many of our customers are asking us what they should do and here are 5 reasons we believe you shouldn’t be panicking right now.
1) What the media says and what is actually true are rarely the same
Papers and news outlets are there to sell newspapers and advertising space, so don’t assume that they aren’t sensationalising a story or omitting facts to make it scarier and generally more news worthy. The FTSE 100 closed at 6,162 – remarkably just 2.8% down and at a similar level to that seen in the early part of last week. At the best of times, the newspapers are full of hype, and the reality is at this moment in time, nobody knows what the future holds.
2) It’s a marathon, not a sprint
When it comes to financial planning, you should be taking a long term view. It’s always worth remembering that Investment values can go down as well as up. Pensions should be viewed as a long-term investment with long-term goals – which is why we tell our customers- it’s a marathon, not a sprint. We’re looking for long-term growth not necessarily quick wins, in reality, this can mean short-term losses, which should be expected.
3) Markets can go up as well as down
When markets rebound they tend to rebound rapidly. You may feel like pulling your money out but most of the market’s 10 best days over the last 20 years have occurred within two weeks of the 10 worst days*
4) You’re diversified
If you take an active interest in your money, you should be diversified, so a fall in some areas may not follow through to all areas of your investment portfolio. Diversified portfolios are designed to spread your risk and minimise both short-term and long term losses.
5) You have a plan in place
Market corrections are frequent and normal. If you have a financial plan and risk management strategy in place you shouldn’t worry about standard market fluctuations. If you have trouble sleeping at night, then your investments don’t match your risk tolerance. This is a problem that can easily be fixed with the right plan in place.
In conclusion, don’t panic sell – panicking and selling at the bottom of the market could mean that you miss out on the upside as the market’s rebound
If you don’t have a plan in place then you should hire an advisor who will help you build a sound and relevant financial plan with a risk management strategy to suit your risk tolerance. Need Help? Email us for details