What does a snap election mean for your investments?

So June 8th is the proposed date for the next general election, as long as Teresa May can secure a two-thirds vote in the house of commons today. As political surprises go, this is a big one; she has certainly caught everyone on the hop, which could prove a very astute political move.

Ahead of May’s announcement in Downing Street yesterday, the pound fell sharply in anticipation of possible news of military action in Syria. Once the election was announced, it quickly bounced back and made gains for the day. The reaction of the stock market was the opposite; the FTSE 100 ended the day 2.46% down. Investment and currency markets won’t like the uncertainty that an impending election will bring, so there is a good chance that this increased volatility (both up and down) in markets over the next two months will continue, as every little bit of news is over analysed by the media and the market alike.

What will be the longer term implications?

In the longer-term, elections generally have little impact on investor/market sentiment and should only be viewed with a longer term strategy in mind.

There will always be political and Geo-political issues that will effect the market. The world is always in flux; when markets look forward they will consider the next UK, German, French or US election ahead to potentially cause havoc in the markets. Add to this the latest Geo-political issues in the middle east, North Korea andRussia and it can seem that we face a constant wall of worry. However, markets will eventually come back to the fundamental value of the underlying companies in the stock market.

For those of you who spoke to your Beaufort adviser this time last year, you will remember that the same warnings were given about the EU referendum, followed by a reminder of why you were invested and what your longer term goals for your investment are. Short term shocks should not de-rail longer term plans. So keep calm and carry on investing should be the mantra at this time. Remain focused on what you want/need to achieve in the longer term, as nothing that happened yesterday has affected this.

Andy Coles specialises in wealth management, helping clients manage their individual financial requirements using the latest financial lifestyle modelling software. Using personal information, he builds bespoke portfolios based on clients’ futures needs and aspirations. Andy holds a Diploma in Financial Planning and obtained Chartered Status in December 2015.

Contact Andy on: 0118 987 9400 or email: andrew.coles@beaufortfinancial.co.uk