As a personal investor, should I be concerned about Brexit?
How will the markets react moving forward to any news about Brexit?
Yes, a country leaving the EU is a historical and potentially once in a lifetime event. The ripples from the #Brexit will ripple across the globe. If you’ve been watching the news today you may have heard all kinds of news about major movements in the various stock markets around the globe. What does this mean for you and your Financial Plan? CBS News sent a camera crew to my home last night to get my thoughts on this topic and I thought I’d share a few of them here with you.
The last time CBS rushed a camera crew to my home to capture some sage financial advice, the market was down around 600 when they called, but was just down by 300 when I hit the air. This is similarly big news, and also I expect to be similarly short lived. Click here to watch video of David Rae on CBS News with more Brexit Tips.
Couple things to think about:
#BREXIT is big news for the TV folks, but really a non-issue in the long term for you. Ok maybe for you if you are booking a trip to the UK- the British LB value has dropped precipitously versus the dollar which may make a trip to London more cost effective than normal. Other than that this really may not matter much to the average American in the long run. DON’T FREAK OUT!
It’s important to remember that your financial plan and personal investment choices should be based on your LIFE, GOAL, HOPES and DREAMS rather than a roller coaster ride constantly reacting to apocalyptic speculation. This time is not different, and any financial decisions you may make should be made with your long-term goals.
Trying to time the market is a fools journey, no one can do it consistently. This is one of the biggest investing mistakes people attempt and make repeatedly, with little to no success. The goal is to buy low and sell high, but many people who attempt to time the market end up doing the opposite, buying HIGH and selling LOW. Put more simply they are losing money, and most likely paying more taxes and fees than they need to be.
“The Stock Market has a very efficient way of transferring wealth from impatient to the patient,” as the sage of Omaha, Warren Buffett Once said. This quote is quite pertinent in days like this when the markets promise to be volatile.
The main questions that CBS news posed in my appearance last night was, “With Brexit markets are expected to drop tomorrow what does this mean for people’s 401(k)’s?” If you check the markets in the next few days you can expect the Brexit news to cause some volatility, just like every other speculative news, the world has not ended. Don’t freak out and make big investing mistakes that can take you off the path to financial independence.
This news as promised has dominated today’s news cycle, but it shouldn’t dominate your important life and financial decisions. Personally I always like to buy when the market dips, buy low sell high (or never), right?
Don’t let the crazy voting in a far away land, cause you make to make crazy decision here at home.
Hope this Calms your nerves a bit,
Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through Trilogy Capital, a Registered Investment Adviser. Trilogy Capital, Trilogy Financial and NPC are separate and unrelated companies. The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by NPC. www.financialplannerla.com
No. If you are a long-term investor, and I dare say there is really no other type, everything else is a form of speculation. Given that, Brexit, along with any other major sensationalist news headline can be effectively ignored as the markets have always, given a long-enough time period, gone up. You need only to pay attention to your financial plan and not what is out of your control.
In 10 years the only talk of Brexit will be on a rarely visited Wikipedia page.
Your question is understandable, particularly given that the UK is the fifth largest economy in the world and the voters' decision to leave shocked people and markets around the globe. And if you've been watching the financial news, I'm guessing you've seen many different opinions on how Brexit will affect investors.
As nerve-wracking as this is, if you look back through history, major negative events happen with some regularity and stocks have always found a way to bounce back.
In the article, I've gone back and looked at historical returns from 1928-2015. During this period, a simple 60%/40% stock/bond portfolio never lost money if held for seven years or more:
Amazingly, this includes some pretty bad seven year periods that witnessed events like
- The Great Depression
- World War II
- Stagflation of the 1970's
- The Tech Bubble Market Crash
- The Housing Market Meltdown
No one knows for sure what will happen as a result of Brexit. However, if history is any indicator, while not guaranteed, it's highly likely that seven years from now your stock and bond portfolio will be worth more than it is today as long as you're willing to stay invested and wait out these uncomfortable market-moving events.
Thanks for the great question!
With Kind Regards,
That's a good question. I will answer your question in one word; yes. In the short term I would be concerned, not only about Brexit but, the current stock market environment. I would be taking a more defensive stance in your portfolio. This would include gold, utilities and bonds. I currently like symbol "GDX" Gold Miners. I have also included the link to an article I wrote on Benzinga that was published today. I hope this help. Feel free to write back.
If you are a long-term investor with a diversified portfolio, Brexit or any other financial news should not bother you. In the grand scheme of saving for the future, it’s nothing but a hiccup. Ideally, you may want to treat them as white noise, or simply tune off the 24/7 news as it can cause you to be second-guessing your decision. If you are still unsure about your choice and want to hear some feedback on your decision making process, talk to a professional CFP®, who can help evaluate your current financial situation and check your portfolio to see if it still meets your goals. Best of luck!