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Current Financial World Events Affecting Retirement Investments

Posted by : Premraj | Posted on : Wednesday, November 16, 2016

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Planning for your financial future is essential, especially during these times of economic uncertainty. With people predicted to end up working longer, a volatile political environment and many more money worries cropping up all the time, saving and preparing for retirement is a vital part of this. There are many things going on in the current financial world that will affect retirement savings and investments, which are important to be aware of to maximize your financial future.

Fluctuating Forex Market

Two of the biggest news stories of 2016 have had huge impacts on the currency markets across the world. Both Brexit and the US election have seen currency values fluctuate. In the immediate aftermath of the UK voting to leave the EU the pound saw its value drop to its lowest depths in 30 years. Then a few months later in the run-up to and after the announcement that Donald Trump had won the US election the US dollar also weakened.

The pound did make a decent recovery and performed well against the euro and dollar around the US election. However, since then it has begun to slide a little and with the ongoing uncertainty surrounding Brexit and what it will mean for the UK’s financial future, this could affect retirement savings.

Depending on when you plan to retire, it could take years for the UK economy to fully recover after it finally leaves the EU. Currencies will continue to fluctuate, so it could even be a better idea to invest in a safer currency such as the Japanese yen or Swiss franc for when it comes to retiring.

Deutsche Bank Stumble

It’s not just those directly impacted by Brexit and the US election that are experiencing financial problems. Deutsche Bank, one of the largest banking and financial services companies in the world, have had a few recent troubles. There have been claims that it has asked the government for help and it faces a huge settlement after a mis-selling scandal regarding residential mortgage backed securities.

Some believe this could be as much as $14 billion, which would hit the bank hard. Anyone who has savings, investments or retirement funds with Deutsche Bank should understandably be worried. While it is such a large institution that would be expected to get through such a tough time, the outcome is still unpredictable.

Property Values

Investing in property is one of the most popular methods of financing retirement, with almost two million Brits between 35 and 85 years old doing so. This includes everything from downsizing to buying to let holiday homes, re-mortgaging and more. It can be a good technique if the properties increase in value and provide a decent return.

However, property value tends to go in cycles, so when it comes to retiring there is a chance that your home and/or properties may have dropped in value. It is therefore important to keep a close watch on the property markets to work out if investing in property is a viable retirement plan.    

Continuing Instability

All the previously mentioned factors along with the ongoing recovery from the global financial crash have presented a lot of instability into the financial world that doesn’t look like going away any time soon. This is a worry for those saving towards retirement as it makes many investments and money saving strategies harder to predict.

There seem to be a lot fewer safe investments around, with banks feeling the pressure and even big businesses whose share price usually will only rise are under threat. Unless the markets calm down and stability is restored, investing towards retirement looks to be a somewhat risky endeavour in the coming years.

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