Placing a bet on Brexit

For the last 3 months, it looked and sounded like the Prime Minister had placed a bet on Brexit happening. It was always inevitable though that the latest Brexit deadline of the 31^st October would be missed. The PM had maintained a ‘positive spin’ throughout on the prospect of the country leaving the EU; in reality, he faced an almost impossible task.

Never before has a single issue created so much confusion in the UK! Despite all the protestations, there are still three possible scenarios:

1. Leave without a withdrawal agreement (hard Brexit);
2. Leave with a withdrawal agreement (soft Brexit);
3. Remain

Parliament has proved itself capable of creating the most unholy of alliances, even between those who vehemently disagree with each other most of the time.

It would appear that we are no further forward today than when we started on this journey three and a half years ago. The road to Brexit has been long and at times torturous! Even at this stage of proceedings, very few people would bet on what the outcome might be.

Flexibility is the key

A flexible financial planning strategy means we can ‘hedge our bets’ with the option of ‘shuffling the deck’ if and when required. We don’t know which way the upcoming election will go. No one knows what the implications will be regarding the EU withdrawal bill; nor do we have any idea what the endgame is. Whilst there are always specific solutions to financial planning problems, the over-riding message is the need for flexibility.

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Expats should consider the following:

• Ensure that you are taking full advantage of investment-related tax allowances available in your host country;
• Review your pension and investment portfolios and consider rebalancing them to protect against any stock market corrections;
• Be aware of adverse currency movements. It is difficult to budget if our investment holdings are based in Sterling, and most of our out-goings are in Euros.

It's best not to bet on Brexit

I’m not a gambling man. My occasional dalliance with the betting industry has proved much more profitable to them than me. I have realised that however attractive the odds might be, the balance of probability is they will win more often than I do.

Betting companies employ some of the best and brightest from the world of mathematics who calculate the odds of the sheepskin noseband winning the 3.15 at Kempton Park, based on probabilities and past performance. And as the old saying goes, ‘you never see a poor bookmaker’.

Rather than risking a bet on Brexit, we should apply the following tactics:

1. Have a look at all Brexit outcomes which affect our financial lives;
2. Consider which are the most likely, check past performance and make the best guestimate of what the future might hold;
3. We need to game the system a little though and ensure we can (just like UK MPs) change our mind at the drop of a hat!

Discussing ‘what if’ scenarios with a qualified and experienced financial adviser is a good place to start. A properly constructed financial plan will be able to change when circumstances change. It will provide us with the flexibility we need and help us prepare for whatever Brexit throws at us.

Feel free to contact us for further guidance on Brexit and your financial planning strategy

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