Brexit is a huge issue that still looms large over the UK’s long-term economic outlook. Now that Article 50 has been triggered and negotiations are underway, many investors will be wondering quite how it will affect them in the future. The sort of Brexit deal that the UK ends up with is still open to question, with many fearing a hard Brexit or no deal at all.
Naturally, Brexit will be a key issue for anyone looking to invest new money into stocks or currency. Anyone who currently has any portfolio interests in these areas will be keen to factor possible Brexit fallout into their decision-making for the future.
Of course, no one can truly predict what is likely to happen in terms of the fallout from Brexit, but many fear the uncertain environment that this creates in itself. If there is one thing that the financial markets don’t like, it is indecision, and the unclear nature of the UK Brexit deal falls well into this category.
For any potential investors, this could be enough to make them wait on the sidelines to see just how the markets pan out. It is not only stocks that face this dilemma, but investors in the Foreign Exchange market could also see the various currency pairs fluctuate greatly as Brexit plays its part.
Whatever kind of investment or investments you may have or be thinking of having, it is worth knowing about the biggest potential pitfalls that Brexit could bring.
Brexit fallout for investors
As noted above, it is practically impossible for anyone to say for sure what will happen to your investments as a result of the ongoing Brexit process. There are, however, a few potential issues to consider if you are thinking of investing or have some interests already:
- Potential weakness in the pound – if you have any currency investments in the UK pound, then you would do well to keep a close eye on them. Against major rivals such as the US dollar, it has been generally weak since Brexit was announced. While this is not all Brexit’s fault, the ongoing negotiations could bring news that could see it weaken further. Keep an eye on the news around Brexit in 2018 carefully to try to keep on top of the health of your pound-based currency investments.
- Stock market woes – it must be said that the stock markets did not react that much when Article 50 was triggered and Brexit got into full swing. This was mainly because the markets had fully expected this to happen and already factored it into prices. Of course, predicting where the FTSE 100 will head in 2018 is difficult, and investors will again need to keep an eye on Brexit negotiations in this regard. Any delays or difficulties could see the FTSE 100 and other markets hit as they react to this happening.
- Sudden drops in price – whether you invest in stocks or currency, one big problem for any investor right now is how changeable the markets are. Even a minor comment from a junior minister around Brexit can see big drops in stock and UK currency prices. This makes investing in the market at the moment a little tricky.
- Political storm clouds – as we all know, Brexit is a political issue, and politics could be a pitfall to trap some investors if they are not careful. Although the Brexit talks are now on a firmer footing, there is still a long way to go. This could spell trouble for your investments as any politic upheaval could see their value plummet as a result.
- UK interest rates – the way that Brexit pans out will also affect what the Bank of England does in relation to UK interest rates. Of course, this will in turn have a knock-on effect in terms of the financial markets. Any sign of the Bank of England cutting interest rates could spell trouble if you have stocks in financial or banking-related companies, for example.
- No deal – this is perhaps the one thing that has both current and potential investors running scared! If the UK cannot agree a deal with the EU over Brexit, the effect on your investments could be profound. If this even looks like happening, then you need to seriously get some advice on what to do before you potentially lose a lot of value on your investments.
Investing is not a sure-fire thing
There is no doubt that you should get all the information available together before deciding to invest any money in a company or currency pair. However, it is important to remember that investing has always been a risky profession and always will be. This is because you are trying to predict what will happen, and sometimes you just get it wrong,
At certain times though, it may not be your fault. Some unfortunate people receive bad advice or are talked into investing their money when they don’t fully understand the consequences. If this applies to you, you should think about putting in an investment claim. This will allow you to follow up your experience with a reputable company that can try to help get you some compensation. Although this may not reduce the stress that you will have felt at the time, it will at least see some financial recompense for you.
Brexit will make for an interesting 2018
If there is one thing that you can say with a degree of certainty, it is that 2018 will be a roller coaster year thanks to Brexit. Knowing this in advance and the potential problems to look out for will help keep your investments safe or give you the confidence to invest at all. One real tip is to keep a diversified portfolio – this will spread your risk and hopefully see you able to absorb any losses if you are unlucky enough to fall foul of Brexit. By not putting all your eggs in one basket so to speak, you can make 2018 a great year for your investments still.