Brexit and Your Retirement

byAndrea881

1.3K followers

9 years ago

Unless you are living under a rock, you heard of Brexit!

Brexit is an abbreviation of "British exit", which refers to the June 23, 2016 referendum by British voters to exit the European Union. The referendum roiled global markets, including currencies, causing the British pound to fall to its lowest level in decades.

Brexit referendum: What it means for Americans’ retirement, investments

Experts say that the markets will be unsteady in coming weeks and months. Lots of changes will happen:

• the U.K. as well as the rest of the word are trying to figure out what this divorce really means;
• Prime Minister David Cameron is about to leave;
• other European countries weigh the same option.

This sounds like one of those "celebrity" messy divorces that are full of drama and nobody knows who is getting what.

Dow Jones Industrial Average (DJI) Value Over Time - Trailing Year | FindTheCompany

Experts say this may be a good time to review your portfolio or the mix in your retirement plan and make sure it's set up in a way to help meet your long-term goals. If it's not, decide yourself — or with the help of a financial adviser — how you need to tweak it to get there. But do not panic! We all know that panic moments do not bring anything new.

As Brits say:

Here is the good news:

If you need to borrow money - you just got an extension on the "low rate", which means you can lock in long-term low rates for a longer period. People who are looking into buying a new home and they couldn't find interest rates below 4% they should renegotiate the deals they made with the banks or look for new financing options. If you own a mortgage with interest rate above 4%, you should probably look into refi (again).

Now, the bad news:

If you are a saver - your life probably suck right now. On Friday, the Federal Reserve issued a statement noting that it is "prepared to provide dollar liquidity…to address pressures in global funding markets, which could have adverse implications for the U.S. economy."

Translation: If the economy suffers short term because of Brexit, the Federal Reserve Chair Janet Yellen's team is prepared to help. So, most likely the interest rates will stay low for a longer period of time rather than rising as everybody predicted they will do later this year. If you are a saver, your savings, money market accounts, and certificates of deposit will give you an anemic return for a while.