On 9 June, Britain woke up to the news that the general election had resulted in a hung parliament. No political party managed to win enough seats to secure an overall majority – it was an outcome that many of us weren’t expecting.
It’s fair to say that things are still up in the air; and amidst the uncertainty, you might be wondering what the result of the election means for your financial future. So, what’s changing now, and what could the future hold?
How has the market responded?
The result of the election led to an initial 2.3% drop in sterling against the dollar at just below $1.27, the BBC reports*, along with a 1.4% drop against the euro, at 1.1386. Yet, as analysts writing for Pound Sterling Live explain*, the value of the pound rose on the day Brexit negotiations got underway. The pound to dollar rate increased to touch the 1.28 level, while the pound to euro rate reached the 1.1435 mark.
If you have investments – think long-term
The volatile market may have you worried about the value of your investment portfolio, but don’t be: history tells us that the market is likely to recover, so sitting tight and riding it out could be the best option.
The key to successful investing is thinking long-term; don’t become consumed by how the current market is performing. Allow time for your investment to work and grow your money to help fund your long-term goals; and think about drip-feeding your cash to smooth out bumps in the market.
If you’re thinking of investing – diversify
To use another well-known saying: don’t put all of your eggs in one basket. In a volatile market it’s important to minimise risk as much as possible, bearing in mind that any investment involves a level of risk.
Diversification limits investment risk by spreading your money across a number of assets or funds. It can’t guarantee against loss, but it will limit your exposure against one type of asset.
Take the Zurich Stocks and Shares ISA. It invests in the Zurich Horizon Multi-Asset funds which offer a diversified investment across multiple assets and can be matched to your risk attitude and capacity for loss. You just need to bear in mind that, as with any investment, the value of your portfolio could fall as well as rise and you could lose all of your money.
You may be hesitant to enter the world of investment in the current market; but as we mentioned, you shouldn’t let short-term instability dictate long-term strategy. In any case, it may be worth talking to a financial advisor, who can recommend funds based on your risk appetite.
It’s a double whammy for British tourists: the value of the pound has fallen, while prices abroad keep rising. An article on the Guardian shares* an example: in 2015 holidaymakers paid around £700 for €1,000, but now they pay around £879.
Of course, this shouldn’t put you off soaking up some much-needed sunshine, but you still want to make sure you get the best currency exchange deal. Take time to research your options, bearing in mind that currency specialists often have better deals than the high street.
Things to watch out for in the future…
Key decisions surrounding issues such as the pension triple lock, social care, retirement age and pension tax relief are going to be put on hold until the next government is decided. For now, it's important not to panic or worry. Yes, the political picture may still be a little foggy; but, as long as you’re clear about your personal, short- and long-term goals; including funding your retirement, you’ll put yourself in great stead for securing a better financial future for yourself – regardless of who forms our next government.
The Zurich Stocks and Shares ISA is provided by Sterling ISA Managers Limited, trading as Zurich. Sterling ISA Managers Limited, authorised and regulated by the Financial Conduct Authority. Registered in England and Wales under company number 02395416. Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX.
The Zurich Horizon Multi-Asset Fund range is provided by Zurich Investment Services (UK) Limited, the authorised Corporate Director of the Zurich Investment Funds ICVC and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales under registered number 3383730. Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX.
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