A few days ago, I overheard someone in a café asking, "How can we be entering another recession? Has the last one even finished yet?"

I don't know who he was talking to - he was on his mobile phone - but that snippet of conversation echoed all the stress, worries and fears I’ve been hearing from many of our clients lately.

If you have money invested…

If you run your own business… 

If you’re planning to retire…

If money is tight right now…

Or if you are thinking of making a large purchase….

You might be watching the economy nervously, and wondering whether this is the right time to take big financial decisions – or whether there are any steps you should take to protect yourself.

But if the prospect of a worldwide economic downturn worries you, don’t panic.

How should you respond?

Well, here in the UK, there are two potential economic storms on the horizon.

One concerns Brexit. It is still unclear how that is going to play out. No matter which way you voted, there’s no denying that the political uncertainty creates economic uncertainty. retail-risk

In many ways, the economy is holding up well. As of April 2019, inflation was holding steady and the FTSE 100 had risen by 4% on the month, to a six-month high.1 

But business activity has fallen dramatically since the start of 2017, and sterling is now worth 13% less than before the Brexit referendum.2

The impact on the economy if Parliament passes a deal, if we end up with ‘no deal’ or even if there is a general election remains to be seen.

Meanwhile, there are also signs of a potential slowdown around the world.

Powerhouse economies such as America, Germany3 and China are reporting a slowdown in growth.

In April, the head of the International Monetary Fund warned that the global economy has lost momentum5 and that economic growth in 2019 will likely slow or stall in 70% of countries, though there is still a possibility of improvement by the end of the year and into 2020.

So what does all this mean for you?

Even if the worst happens and the market dips significantly, do not make any rash decisions about your investments.

When you’re faced with the possibility that your investments could suddenly shrink, you are going to feel a powerful sense of urgency and even fear. retail-piggybank

It’s even worse if everyone around you suddenly seems to be selling, or pundits in the media are crying doom and gloom.

The tension can be overwhelming, and you may struggle to sleep soundly at night, because you are worried about your financial future.

Your immediate instinct might be to cash out of the market.

But the last thing you want to do is make a decision under pressure, when you are stressed and emotional, and regret it later.

Remember – it’s only a loss if you sell!

And there may be many good reasons to hold onto your investments. The market often rebounds quickly.

So hold your nerve. Don’t act until you have had a chance to think your decision through calmly and objectively.

The best way to do that is to seek advice from financial professionals.

We can help you assess the right thing to do, logically, taking all the emotion out of it.

Please get in touch before making any changes to your portfolio, if you have one. We are here for you.

Of course, there are steps you can take to protect yourself now, in case the economy does take a turn for the worse.

This may be a good time to spread your assets wide by building a more diverse portfolio. There are many stocks worth buying at the moment.

Depending on your situation, selling some investments may make sense for you - but you only want to sell the right ones, not sell all of them in haste.

The bottom line is to seek professional advice.retail-coin

When everything seems to be in constant upheaval, it's far too easy to let stress and pressure force you into emotional decisions instead of logical ones. We don't want that to happen to you, and I’m sure you don’t either.

Your financial situation is unique, so get in touch with us for professional, objective advice tailored to your specific needs.

And in the meantime, true to the British spirit - "Keep calm and carry on"!

The past performance of any investment is not necessarily a guide to future performance and investments can rise and fall.



Enjoyed this article? Don't miss the latest edition of
In Focus, our quarterly newsletter packed with articles to keep you informed on the important issues in financial planning. 

Click to read In Focus - June 2019


[1] https://www.theguardian.com/business/2019/apr/29/how-has-brexit-vote-affected-the-uk-economy-april-verdict

[2] https://www.theguardian.com/business/2019/apr/29/how-has-brexit-vote-affected-the-uk-economy-april-verdict

[3] https://www.bloomberg.com/news/articles/2019-04-17/germany-2019-economic-growth-forecast-cut-in-half-to-0-5-percent

[4] https://www.cnbc.com/2019/05/15/latest-data-show-surprise-slowing-in-us-china-economies-as-trade-war-escalates.html

[5] https://www.theguardian.com/business/2019/apr/02/imf-chief-warns-of-slower-growth-for-most-countries-christine-lagarde

Posted by Peter Selby

Topics: financial planning

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