What a Change in Government Means for Your Investments

It’s been just over a week since the Conservative leadership race reached its climax and Boris Johnson was appointed Prime Minister. With a change of leadership comes a sense of uncertainty, but should you be concerned about your investments?   During his short time in charge, Mr Johnson has made several promises and pledges. There has been speculation, but the potential effect he will have on the economy is still largely unknown. The truth is, no one can predict the future, but we can look to the past for guidance.   Historically, the market has provided substantial, long-term returns regardless of who lives at number 10. For investors, this is good news.     The above graph shows the growth of £1 invested in the UK market over 60 years. Over this period, both Labour and Conservative governments have seen 12 people occupy number 10. Whether it’s team red or team blue in charge, there are no obvious patterns to suggest a stronger stock market performance in the long-term.   Of course, there is the small matter of Brexit. The deal (if there is one) that Britain walks away with could be the defining moment of Boris Johnson’s political career. The markets will likely reflect the outcome of the Brexit negotiations which could see the stock market and your investments take a temporary hit.  

Should you consider selling your investments?

  Investments are a way of growing your money over the long-term, and fluctuations in the market are expected. During turbulent economic times, it can be tempting to cash out and sell your investments but don’t panic.   Over the 60 years that the graph covers, there have been several major events economic events including the banking crisis in 2008 and recessions. A dip in the markets around such events is inevitable, but one thing that has remained consistent is their growth over the long-term.   Although no one can predict the future, there is a strong case for sticking to your plans and remaining invested. If the graph tells us anything, it’s that the markets are robust and bounce back no matter how bad things get.   Before making any rash decisions with your investments, it’s always advisable to speak with a professional. If you have any concerns, or you would like to know how the current economic climate could affect your investments, speak to a financial advisor.

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