If you have a personal pension in place then it’s likely that your pension is currently invested in the stock market and therefore already a victim of the volatile market place following the pandemic. Now you have Brexit to worry about and how that might affect economic movements in the financial markets.
Europe is the UKs biggest export market and therefore it stands to reason that the failure to secure an agreement could have an impact on the stock market, and therefore your investments. However, these are times when investors can buy into the FTSE 100 at a much lower price, and therefore present with a greater opportunity for rewards. Whilst this might be appealing, it is not without greater risk.
Times of uncertainty can definitely be reflected negatively on the stock market, but how long these losses will remain is unknown and certainly there are some sectors that are more likely to be impacted than others such as aerospace, pharmaceuticals and autos.
So how do you protect your pension during this time? It seems that the general consensus is that diversification is the key particularly using low cost ETFs. Having your investments spread over a broad range of assets can help ensure you don’t get hit by Brexit, however, how you spread your investments should depend on your age and how far away you are from retirement.
More volatile assets such as equities can see a drop in value nevertheless, for younger and middle aged workers who are currently saving into a pension this can be a good thing as your pension pot will be able to buy more investments with the fall in prices and there is still plenty of time for the market to recover before you intend to cash your pension in. That being said, savers who are close to retirement require a safer strategy.
The most important thing is to remain calm and remember to never sell in a period of volatility and potentially miss out on any market recovery that might take place.