The long-standing theory has always been that uncertainty is bad for markets and so, as we accelerate closer towards cutting our ties with the EU, you would expect the markets to suffer. However, since the start of the year, the stock market has generally shown great promise. The FTSE 100 is up 7% while the FTSE 250 is up 8%. It’s more than just speculation to suggest that a no-deal Brexit would result in a plummeting sterling and put firms in front of trade tariffs. So, that being said, if you have invested your savings into stocks you’ll be perfectly entitled to some concern. After years of investing and making intelligent moves, you don’t want your hard work hampered by the hands of unruly, reckless politicians.
Holding savings in cash has its drawbacks. The interest paid in personal pensions and investment ISAs is miserly to the point where inflation cancels out any gains. However, the downsides of staying in the market right now are equally precarious; at least that’s the case for mature investors, younger market riders would be in a better position to surf the stocks in the long term. How much time do you have? One of the biggest factors to take into account is the impact of currency fluctuation. A soaring sterling would impact the multinationals because their profits are in dollars. Overseas investments priced in foreign currencies will take hits. This is a big problem because investors have been selling UK funds and buying international assets from the US and elsewhere. As a result, if the sterling goes up or the dollar falls (or both), then those global funds will struggle to show profits to UK investors. However, if the Pound plummets then that would also have a detrimental effect.
The Brexit story is far from over and as we gather more information, we pick up more noise. To separate the two is a troublesome affair and so most investors are busy trying to safeguard their investments rather than spend time trying to laboriously pick apart the facts from the fiction. The most common approach appears to be the movement of investments to more secure opportunities until the smoke has cleared and the story is easier to foresee.