Over the last year or so, as the Brexit fiasco has rumbled on, we have noticed some investors are hesitant when making investment decisions, missing out on excellent short-term investment opportunities. Uncertainty makes investors fearful, and we have had plenty of uncertainty.
The question of what you have lost by not investing is as significant as what you might gain by investing. Of course, the breadth of possible investments is so extensive that Brexit might create additional risks for some classes of investment but not impact others at all.
If you are thinking about Brexit as one of your critical investment parameters, there are two elements to consider:
The defining characteristics are uncertainty and volatility, with exchange rates bobbing up and down, and share indices in a similar situation. Any investment that can change its value at the drop of a hat, like money or shares, is almost impossible to predict. Perhaps a good reason for staying out of the market unless you are a dedicated short term trader, able to benefit from quick changes in the market.
In terms of more stable assets, like property, the limited timeframe to Brexit probably rules out any significant change, up or down. You probably won’t lose much, but your gains will be limited, assuming your profit is reliant on changes in asset value.
Post-Brexit, we still might face uncertainty and volatility. With a longer timescale measured in months and years, you will see sustained growth in property values due to the ever-present shortage of stock in the UK property market and a stagnant transaction period pre-Brexit.
Of course, we all see the issues around uncertainty and volatility and the considerable difficulty in picking the ‘winners’. But by staying out of the market, we make nothing, and with interest rates not matching inflation, our capital is dwindling. Not helpful if you rely on investment income for part or all of your financial support. And equally unhelpful if you are building wealth for the future. Every year you delay making investments costs you dearly at the other end of the investment period through a much-reduced capital sum.
I’m sure that all investors sitting on cash or other non-performing financial assets like shares, government bonds, savings deposits and so on would love to see their money generating a decent return, let’s say in the region of 9%-15% annually.
But how can you invest with the benefit of a 10% pa or higher annual return, at an acceptable level of risk?
Here’s a strategy you might like to consider, depending on your circumstances and taking into account your attitude to risk and capacity for loss.
I’d say that with this set of investment ‘rules’ your money could be earning very well for you right now – without all the angst and worry of what might or might not happen with Brexit.
Found this thought-provoking? Call and chat to our team here and explore the investment portfolio currently available through Avantis Wealth. You might be surprised that ALL our investments meet every one of the criteria of the six-point plan!
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Through 2019, we saw a steady rise of concern that Brexit (or not) might badly hit the property market. The political uncertainty fed investor concerns that the medium to long term prognosis for UK residential property had turned negative.
