Shock Result – UK to leave EU!

In June 24, 2016
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At about 4:40am today, it became clear that the Brexit campaign had been successful and that the majority of those who voted yesterday, voted to leave the EU.

This will have a dramatic effect on the economy, the political world but most importantly for all of us, on our investments.

The surprise of the result has and will continue to cause a massive fall in the value of the pound today, and will also cause a significant fall in the value of UK and European shares. Many other investments around the world will also fall as markets open. This will probably result in a fall in your portfolio.

As discussed during our Annual Client Investment Seminar and echoing my words yesterday, all of our clients can take comfort in the fact that they are invested in well   diversified portfolios, all of which have built in a degree of protection against this result, even though no commentators expected an OUT vote. This protection will mean that while your portfolio will be affected by market movements, it will be affected much less than the fall of the markets that you will see in the news now and in the days to come.

Those clients who have invested in the recent months and weeks prior to the referendum have still bought into the market at a discount and although the results today will mean markets have and will continue to fall further before they bounce back, they will, given time, bounce back.

We must therefore take care not to make knee jerk reactions, especially as it is not clear how the Bank of England will react to the falls in the pound. A large amount of the fall will be temporary, as markets will bounce back. However it remains to be seen how long ‘temporary’ will be.

All our fund managers have been examining this scenario over the past few months and evaluating their positions and will issue further communications once the full situation becomes clear and we know what action the Government and the Bank of England decide to take.

As David Cameron so perfectly said in his resignation speech, “The British people have made a choice, that not only needs to be respected but those on the losing side of the argument – myself included – should help to make it work. I said before that Britain can survive outside the European Union and indeed that we could find a way. Now the decision has been made to leave, we need to find the best way and I will do everything I can to help.”

Our best hope now is that we are able to have some kind of European Economic Area membership, akin to Norway, but this will now form part of the negotiation process and likely a two-year journey to complete.

Whatever your personal and political feelings on this subject, there is no denying the historical significance of this moment and impact this decision will have for generations to come. It is the start of what I hope will be an exciting period where the UK can hopefully unite to create a stable positive way forward and that responsibility rests heavily with the politicians and elected officials on both sides of the argument to work together for a more prosperous future.

We are now in completely uncharted waters, as no one can know what lies ahead. We may see an immediate cut in interest rates, a small dip back into recession, an emergency budget or even a return to quantitative easing in order to protect and stimulate the economy. What is absolutely certain, more so than ever, is the need for active investment management and proactive advice as we embark on the journey of leaving the European Union.

As I said yesterday, life will carry on; the markets will stabilise, adjust and then rally again. Our job is to remain focused on the long-term interests of our Clients and to make sure the fund managers continue to seek out the growth opportunities that are still available in the months and years to come.

 

Disclaimer

Your capital is at risk. Investments can fluctuate in value and investors may not get the amount back they invest. Past performance is not a guide to future performance. Tax rules can change at any time.

Please remember your home or property may be repossessed if you do not keep up repayments on your mortgage.  We give clients the option to pay for mortgage advice by fee rather than commission. Equity Release refers to lifetime mortgages. To understand the features and risks, ask for a personalised illustration.

The Financial Conduct Authority do not regulate, Will Writing, Buy to Let Mortgages, Auto Enrolment, Tax Advice and Estate Planning.

The opinions contained within this blog, do not constitute financial advice and no action should be taken based on this content alone.

Jasmine has been a qualified Financial Planner since 2008. She has also been a member of the Society of Will Writers since 2012. She is passionate about helping Clients build their wealth and achieve the financial lifestyle they desire. Her areas of expertise are that of Savings, Investments, Pensions and Retirement Planning.

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Disclaimers

The Financial Conduct Authority do not regulate, Will Writing, Buy to Let Mortgages, Auto-Enrolment, Tax Advice and Estate Planning. Your capital is at risk. Investments can fluctuate in value and investors may not get the amount back they invest. The guidance and/or advice contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK. https://register.fca.org.uk/

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