Just when you thought it was safe to plan for the future, MP’s have gone and shown again that the end of the “Brexit tunnel” is no nearer! Given the continued uncertainty, more and more people are asking us what this means to their finances and how they can “Brexit proof” them so here are a few pointers for you to consider:
Firstly, do you have savings with a EU (European Union) or EEA (European Economic Area) based savings account? Worried about how safe your money may be after Brexit? You shouldn’t be – at least not yet anyway, thanks to an agreement with the UK Government reached in February you will continue to receive protection from the Financial Services Compensation Scheme (FSCS) for at least 3 years after Brexit! What this basically means is that you will continue to be protected by the UK Government for up to £85,000 of savings with any bank if they went bust! Phew! However, it is worth getting in touch with us to make sure your bank is actually covered!
British ex-pats living in the EU currently benefit from the same generous indexation increases to their state pension as UK resident individuals (unlike many in other countries including Australia and Canada!). The British Government has confirmed this will continue to be the case until at least March 2023. Don’t panic just yet then Mr Mainwaring!
More complicated I’m afraid as it will depend on many different factors and whom provides your’ benefits. You need to take professional and tailored advice urgently! You should also consider what currency your pension is paid in as a volatile £ could see the value of your pension reduced!
Firstly, think about this, the UK makes up just under 6% of the global stock market, therefore if you have more exposure than this in your portfolio, you are effectively “overweight” the UK! There are many other factors that will affect your investments including the obvious one like the stock market itself (and heightened volatility is now the norm!) but also the fact your UK based fund is valued in £ sterling. Meaning overseas assets priced in yen or dollars need to be revalued back so a falling £ will have a negative effect on your valuations.
As always, a well-diversified portfolio (diverse by asset class, geographically and sector) is vital and avoid trying to make knee jerk reactions. A sensible long-term strategy will always win out! Having said this, taking the opportunity to review is vital.
Most UK mortgages will be with UK based lenders so at least this is one thing less to worry about! The bigger issue is what will happen to interest rates and this is where a good crystal ball is needed!
Sadly, our crystal ball is broken so whether there will be economic turmoil is impossible to see. For those clients that would like certainty of their repayments, as always, a fixed rate would be ideal and these are now available for up to 10 years, when hopefully the Brexit mess should be sorted? If there was (as may be expected) economic problems, it is likely however the Bank of England could move to reduce interest rates so locking in now may not be a good idea. Depending on your circumstances you need to tailor your approach and speak to our friendly mortgage advisers urgently.
As always, the devil is in the detail but it is always sensible to regularly revisit your plans and ensure they are, where possible Brexit-proofed. Get in touch with your local experts and help ensure your very own Financial Fortress!