I was chatting with a client the other day about the potential implications of a hard Brexit, soft Brexit, medium rare Brexit and about any other incarnation of Brexit you can imagine.<\/p>\n
Despite all of the white papers and policy discussions, the divisions between the very people supposed to be making the negotiations with the EU suggest that we have a very long way to go before a deal becomes \u2018clear\u2019.<\/p>\n
Our conversation turned to the timing of investments and specifically, \u201cshould I invest money now<\/strong> because a \u2018bad Brexit\u2019 (which in the context of the markets is supposedly a hard Bredit) could cause havoc for stock markets\u201d.<\/p>\n As the conversation evolved, I realised that my response to the question was pretty much the same response I give to anyone who is worried about some sort of \u2018market event\u2019.<\/p>\n Granted, Brexit might be a fairly major event in the grand scheme of things (or perhaps it wont \u2013 we really don\u2019t know), but the principles are still the same.<\/p>\n My response went something like:<\/p>\n Before Brexit we had Trump, before Trump we had a million other things we could have been worrying about.<\/p>\n There will always be a reason not to invest. The human brain loves not making a decision, it loves to procrastinate. The problem is that there is always something on the horizon that could be the next big disaster which gives us a perfect excuse to put off taking action.<\/p>\n After Brexit is complete, there will be something else \u2013 mark my words!<\/p>\n Using Trumps election and the Brexit vote as perfect examples, both were predicted to cause financial meltdown and havoc if they became reality and indeed they did, for about 2 days!<\/p>\n After this incredibly short period of time, markets continued their march upwards and have gone on to break records on a seemingly weekly basis ever since.<\/p>\n Had you taken all of your money out of the market on the day before the Brexit vote, when would you have put it back in?<\/p>\n I strongly suspect that you would not have pressed the \u2018buy\u2019 button again after those 2 days steep falls and indeed, anecdotally, those who did this are still sitting in cash, waiting for the right moment to invest, having lost out on 20+ per cent growth in the mean time.<\/p>\n As such, making these timing decisions is like flipping a coin \u2013 there is no way of know which way things will turn and in the short term markets move in almost random directions.<\/p>\n So \u2026 back to the point \u2026 what should someone do if they are thinking of investing and they are worried about a big event triggering a crash. Our suggestion here is always the same:<\/p>\n This staggered approach minimises the potential for a big crash to upset your whole investment and in fact it could turn it into an opportunity. Lets say that the market falls 20% after you have invested your first 2 tranches. Well \u2013 you can now buy the rest of your investment at a 20% discount on what you paid before \u2013 fantastic!<\/p>\n Now of course, this strategy can also work against you \u2013 if the marker rises by 20% after 2 tranches, you should have invested the lot on day 1!<\/p>\n But all of this assumes you can predict the future and you can\u2019t. What we achieve by investing over a period of time is that we reduce the risk of buying at a very high or very low point \u2013 we average out and in an impossible to predict world, I will take the average every time.<\/p>\n","protected":false},"excerpt":{"rendered":" I was chatting with a client the other day about the potential implications of a hard Brexit, soft Brexit, medium rare Brexit and about any other incarnation of Brexit you can imagine. Despite all of the white papers and policy discussions, the divisions between the very people supposed to be making the negotiations with the… Read more »<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-2194","post","type-post","status-publish","format-standard","hentry","category-investments","wp-sticky"],"_links":{"self":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts\/2194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=2194"}],"version-history":[{"count":0,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/posts\/2194\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=2194"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=2194"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buckinghamgate.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=2194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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