You’ve seen the headlines and hashtags – but what exactly is “The Brexit?”
“Brexit” is actually an abbreviation for “British exit,” referring to Britain’s recent vote to withdraw from the European Union.1 On June 23rd, the nation voted to remove themselves from the EU, causing quite a few side effects in the meantime.
Britain’s Prime Minister, David Cameron, resigned that Friday as the country watched the pound fall to its lowest level since 1985.2 While the nation is left with its own organizational problems to iron out, the rest of the world is left wondering – what will happen to the economy?
Already, Britain’s stocks lost 11% in the first twenty-four hours following the vote. This was the largest two-day decline since October of 2008.3 Market volatility is to be expected in the coming weeks, but Mark Carney, Governor of the Bank of England states, “We are well prepared for this.”2
Short term effects are certainly happening, and we’re already watching them occur. High market volatility is happening and will continue. Investors will need to take risks when it comes to getting out and back into the market.3
European currencies have fallen, but we’ve seen the S&P 500 dip as well. While some individuals may be overly concerned, it’s important to remember that markets typically react poorly to uncertainty. Because the Brexit vote was so unpredictable and moderately surprising to most professional investors, we are seeing some economic turmoil in the immediate short-term effects.4
While there is always a chance that this vote could disintegrate the European economy, and eventually dissolve out to affect global markets, it is important to note that this is incredibly unlikely. Because Britain knew the exit was a possibility, they have taken preventative steps to ensure their economy can withstand the current volatility.
You may still be wondering – what does this have to do with me?
For those of you who have money invested in global or even national markets, you may have witnessed this volatility within your own investments. As mentioned previously, market volatility is to be expected. It is easy to worry and fret about the state and security of your investments, and we understand this. Watching sudden market drops affect the overall value of your investments and lifetime savings can be scary. This is why Kemp Harvest Financial offers strategies designed to withstand volatility, helping you to create the retirement you’ve always envisioned.
If you have any questions about your own investments with us, or how you can work to add security to your savings, please feel free to contact us.
For more topics like this, check out our radio show “Retirement Plain and Simple” every Saturday morning at 8 on WNPV 1440 AM and like us on Facebook!
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