The United Kingdom voted to leave the European Union. What does this mean to individual investors, particularly in the United States?
Let's start from the beginning. I have no crystal ball. Whatever I say should not be taken as investment advice. Opinions will vary on this issue.
Now, what does this mean? Does the UK voting to leave the EU mean it will actually do so, or will there be some machinations within that nation that somehow prevent it from doing so? If it does leave, will it lead to other nations leaving the European Union as well? If other nations do follow suit, will it cause the collapse of the European Union? If the European Union ultimately collapses, will it lead to great financial peril? Is there any good news in the UK's vote?
Over the next days and months, I am sure you will read economists, political scientists and financial pundits all weighing in on Brexit. If we go out far enough in time, we will be able to turn around and realize that some of them will have made accurate prognostications and some of them will turn out to be wrong. The biggest question is, does it matter to the individual investor?
I think most individual investors are not in a position to speculate and purposely expose more than a small fraction of their investment portfolios, if that, to the winds of political change and the consequent economic ups and downs they occasion.
Prudence suggests some degree of flexibility when managing our investments. It seems responsible to review new information when it comes to our investment decisions. However, if we accept that the terra firma of appropriate investing should be based on what our goals are - like paying for our children's college and building our financial base for retirement - and that our investments should be diversified across asset classes as well as within asset classes, perhaps certain types of information can only be acted on in a narrow way.
More to the point, at times we are going to be buffeted by economic forces. Taking one action or another might seem appealing. However, we will only know if we are right in hindsight. Perhaps, rather than guessing where Brexit might take us, we construct our investments in such a way that we appropriately deploy our money over a variety of opportunities, not randomly, but with the goal of creating a beautiful wealth mosaic, one that takes into account events that can potentially cause near term economic disruptions.
Personally, I believe times of economic and political gyrations may provide opportunities. Yet, even if that is true, I would not want to test that kind of belief by forgetting what my near term, midterm and long term financial goals are. And, I would not want to ignore the importance of constructing a well-diversified portfolio of investments to achieve those goals.
Consider speaking with your investment advisor to see how you might best map out a path to your goals, using a properly allocated portfolio of investments. There is often a gap between knowing what you should do and doing it. Take responsible action now.
Scott McGimpsey July 1st, 2016
This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources, however, we make no representation as to its completeness or accuracy. Neither Summit Brokerage Services Inc. nor Scott McGimpsey is engaged in rendering legal, accounting, or other professionally services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm with securities offered through Summit Brokerage Services Inc., Member FINRA, SIPC