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Expats warned to adjust their investments before Brexit kicks in
| Published: | 3 Oct at 6 PM |
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Despite the continuing uncertainty over Brexit’s final form, the financial fallout is sure to affect expats’ UK-based investments.
Financial managers are urging expats to act now as regards protecting their property, savings and pension investments against Brexit’s expected financial fallout. Hedging your bets includes taking advantage of opportunities and reducing your risk exposure before the axe falls, and are essential steps to ensure the final outcome of Britain’s withdrawal from the EU doesn’t spell personal financial disaster.
At present, the markets are volatile due to stalled Brexit negotiations and uncertainty as to potential effects on the UK economy, with volatility expected to continue for some years. Prolonged volatility is know to affect the performance of pensions and investments, especially as the fall in sterling is expected to continue and even worsen should a hard Brexit be the final result of negotiations.
On 31 August, sterling’s position versus the euro hit an eight year low, and is predicted to sink still further, meaning expats with pound sterling savings on low interest rates are getting little or no returns for their cash. If funds are in a long-term investment, their actual value has already dropped considerably. Pensions are a different, trickier problem, with the Brexit effect depending on the type of pension as well as the holder’s desired retirement age and unknown Brexit outcomes as regards possible new rules on overseas pension transfers.
A recent, somewhat controversial, cause for concern was triggered by reports that company pension schemes might not be able to deliver their promises due to low bond yields, and expat investors are also concerned over UK exit taxes for pension transfers as well as possibly unfriendly pension reforms.Those now approaching retirement age should be looking at adjusting their risk profile diversity, especially if they intend to retire overseas.
Low interest rates are expected to continue, and bank deposit rates are now below the rate of inflation. In addition, the effects of inflation should be factored in, as a spurt in everyday costs can play havoc with the spending power of your capital.
Financial managers are urging expats to act now as regards protecting their property, savings and pension investments against Brexit’s expected financial fallout. Hedging your bets includes taking advantage of opportunities and reducing your risk exposure before the axe falls, and are essential steps to ensure the final outcome of Britain’s withdrawal from the EU doesn’t spell personal financial disaster.
At present, the markets are volatile due to stalled Brexit negotiations and uncertainty as to potential effects on the UK economy, with volatility expected to continue for some years. Prolonged volatility is know to affect the performance of pensions and investments, especially as the fall in sterling is expected to continue and even worsen should a hard Brexit be the final result of negotiations.
On 31 August, sterling’s position versus the euro hit an eight year low, and is predicted to sink still further, meaning expats with pound sterling savings on low interest rates are getting little or no returns for their cash. If funds are in a long-term investment, their actual value has already dropped considerably. Pensions are a different, trickier problem, with the Brexit effect depending on the type of pension as well as the holder’s desired retirement age and unknown Brexit outcomes as regards possible new rules on overseas pension transfers.
A recent, somewhat controversial, cause for concern was triggered by reports that company pension schemes might not be able to deliver their promises due to low bond yields, and expat investors are also concerned over UK exit taxes for pension transfers as well as possibly unfriendly pension reforms.Those now approaching retirement age should be looking at adjusting their risk profile diversity, especially if they intend to retire overseas.
Low interest rates are expected to continue, and bank deposit rates are now below the rate of inflation. In addition, the effects of inflation should be factored in, as a spurt in everyday costs can play havoc with the spending power of your capital.
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