Making decisions in a time of uncertainty
Unpredictable politics and social angst can easily make you hesitate in all walks of life. But sitting on your hands won’t help you generate a return from your investments
Keeping up with UK politics feels a bit like Game of Thrones right now – just with fewer White Walkers and more backstabbing. There are twists, turns, false promises and underhand tactics. Then, just when you feel like you’ve got to grips with what’s going to happen next there’s another plot twist, and things head right back to square one.
No matter what side of the political divide you sit on, all this uncertainty means it’s hard to make decisions with any genuine conviction – especially when it comes to your investments. ‘Uncertain’ and ‘unpredictable’ are not words we want to be associated with our politics or our finances, but that certainly doesn’t mean that there is a lack of opportunities for you to make your investments work hard for you right now.
With the General Election election on the horizon, we’re going to take a closer look at what this could mean for your investments, and show how perplexing politics don’t have to bring your financial decision-making to a standstill.
“How does the election affect my investments?”
There is a wealth of information on the way US stock markets have risen and fallen with their presidential elections. However, here in Blighty we tend to take a more off-the-cuff approach to elections, making concrete patterns more difficult to determine.
Yet at first glance, it seems clear that financial markets and the political landscape have always been closely linked. Back in 1997 for example, a newly energised Labour came to power alongside an early Internet boom that saw markets moving higher and higher.
By contrast, in 2001 shares dropped 9% in the run up to the election according to The Telegraph, and a further 11% in the following months. This was almost certainly due, at least in part, to the terrorist attack on the Twin Towers.
Since the financial crash of 2008, elections have been a lot less predictable. For nearly a decade, markets have not reacted well (in the most part) to an election result and, in recent years, elections have been dominated by Brexit. Following the 2017 vote shares dipped and stagnated for six months in broad terms.
BUT, as always the devil is in the detail. General market trends certainly don’t mean that all investment opportunities are off the cards and that every sector suffers a decline because people are being asked to head to the polling station. While there’s no denying that some industries are susceptible to an atmosphere of uncertainty, others can be well insulated from those particular challenges.
It’s also worth noting that this particular general election promises to make things more certain, rather than less. There is an air of finally trying to put an end to all the to-ing and fro-ing of recent months with a semi-fresh start. Of course, this hope may not be realised in the end, but the hope itself is what’s important for the markets. A more positive national mindset means more positive markets for investment.
In short, parliamentary gridlock isn’t necessarily a bad thing for investors. The likely outcome will be markets that look more to the global economic picture rather than topsy-turvy domestic politics. And with the chance that both Brexit and trade uncertainties could at last have an outcome in the months to come, 2020 could be a better year for investors than the current political climate might suggest. It’s all about making smart investments, and getting the right investment advice.
Getting the right investment advice: choose an independent financial advisor you can trust
Much like politics, the investment landscape can seem like a minefield if you don’t have a plan of where to go next. Very few people have the time or the resources to become investment experts, but that shouldn’t mean you can’t take advantage of the opportunities out there.
The best way to make the most out of your investments and traversing all this uncertainty is to get advice from someone who is an expert. Or, more specifically, an independent expert.
Independent financial advisors make it their job to offer unbiased and impartial advice based on what is going to get you the best results. Remember, not all advisors are independent. Finding the right advisor is important for getting advice that’s in your best interest, not theirs.
Armed with the support of an independent financial advisor, you’ll have no problem navigating your way through the bewildering world of British politics – dragons or no dragons.
For financial advice that’s truly independent, talk to the team at Carrick Financial Management. We specialise in impartial, independent financial advice that puts you first, so you can get the most out of your money.
Get in touch with our independent financial advisors today by calling 0191 217 00 07.