Brexit. The term has been all over the media for the past few days. Brexit is the affectionate term for British voters voting in favor of leaving the European Union which took place Friday, June 24th. Although it may take 2 years for Britain to officially leave the European Union, there has been speculation about the immediate and long term effects. If you are like me, you may be wondering what Brexit means to you. Don’t worry, I’ll tell you.
Have you looked at your 401k or IRA accounts since Friday? If not, I would wait a few weeks. On Friday, the Dow Jones fell 611.21 points or 3.39% and the S&P 500 lost 76.2 points or 3.6%. That means there is a good chance that your retirement account may have taken a dip as well.
The good news is that as millennials we have 30+ years until retirement. The market took an even larger dive after September 11, 2001, and recovered. The first day the market opened after 9/11, the Dow Jones dropped 684 points or a 7.1% decline. No more than one month after that decline, the market was back to pre-September 11 levels. Therefore, stay the course and focusing on investing regularly and for the long term.
Have you been waiting for the right time to invest in mutual funds or stocks? If so, it is a great time to invest new money in to the market. Too often people take their money out when a big drop happens due to fear of losing even more money. When the market isn’t doing as well, it is like getting a sale on certain stocks and mutual funds.
However, before you go investing your life savings keep a few things in mind:
- Make sure you only invest money that you won’t need for a while (3 years at minimum) and that you aren’t afraid to lose. Investing in the market is not FDIC insured like your savings or checking account most likely is.
- Before you start invest, ensure that you have a fully funded emergency fund. In case of an emergency, you will need liquid assets.
- Do plenty of research before diving in to the market. Just because a stock or mutual fund is down, doesn’t mean it is a good buy for the future or your specific situation. Look at stocks that have good future promise and/or a product that you use regular and will be glad to hold stock in. If you work with a financial adviser, talk to him or her about potential companies.
There is speculation that Brexit could push interest rates to “historic lows.” Good news if you are in the market for a new home or are considering re-financing your home. In the past month alone, 30-year fixed mortgage rates have fallen to around 3.7% which is nearly a 3 year low. Many economists have speculated that Brexit will drive rates even lower.
You are in luck if you have a trip planned to London in the next few months. The pound has fallen to its lowest level in more than 30 years which means the U.S. dollar will go a lot further. Some travel enthusiasts have even suggested converting some U.S. Dollars to Pounds for upcoming trips in the event the pound rebounds sooner than later. Right now, United has posted a 3-day sale to Europe with as low as $550 round trip flights. So keep your eyes peeled on the #1 flight search engine for similar deals. Websites like airfarewatchdog have cited a 54% increase in searches for flights to Europe from the U.S.. Keep that in mind as flight deals to Europe won’t last long!
The verdict is still out as to if the effects will be longer term. Many stocks of airline companies have taken a tumble which may be a good sign of lower flights longer.
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