3 Ways Brexit Will Affect You (And 1 Way it Won't)

What will the Brexit Vote Mean for You

 Brexit is the term coined for the UK leaving the EU. The vote, however, is just the beginning. 

Brexit is the term coined for the UK leaving the EU. The vote, however, is just the beginning. 

It's been two weeks since the Brexit, so I thought it would be a good idea to look at how goes the predicted zombie apocalypse that Brexit was supposed to cause. 

If you listen to the mass media, you would assume that the Brexit will mean the end of civilization as we know it. Even the European Council President said Brexit could mean the end of Western European Civilization.

The reality, though, is that the Brexit won't have dire impacts on you, nor your investments. There will be impacts, of course, but they aren't what you might think. Here is what the Brexit willliactually mean for Americans.

Opportunities for Travel

Although the UK kept its own currency, the UK economy was intertwined within the European economy. This meant that as the EU economy strengthened and weakened, so did the UK economy. The break off from the EU means that there will be more distinction between the UK and the EU economies.

The relative strength of the UK and EU economies can result in opportunities to save money when traveling to Europe. When the UK economy weakens (because of normal economic circumstances, not the Brexit), trips to the UK will become cheaper for Americans. As a result, making the UK the base camp for a European vacation could lower your costs. Similarly, if the UK economy strengthens but the EU weakens, EU countries can become your base camp for savings.

In the short term, the UK might encourage greater travel discounts for American's traveling to Great Britain. Bringing in American tourism dollars is a strategy the UK government is likely to use to offset any negative economic impacts Brexit might create. 

Short-Term Investment Volatility & Opportunities

The Brexit caused some significant volatility in your investments over the first two weeks, and with future developments in the Brexit coming, there is likely to be more volatility to come. In the first two days after the vote, the FTSE All-Shares index, which tracks UK companies, lost over 7% of its value. Although that seems like the end of the world, it wasn't. An investor that re-balanced their portfolio after the drop was very happy, as two days later the London stock market bounced right back to nearly it's original value. Two weeks after the vote, the London FTSE All-Shares index has been sitting higher than it was before the Brexit vote.

The  Brexit had a similar impact on the U.S. stock market, with the S&P 500 losing over 5% of its value in the two days after the vote, but making a full recovery this past week. Overall, Brexit created more emotional impact than economic impact on the world. These emotional impacts, however, create opportunities for long-term investors to buy stocks while they are cheaper.

Lower Home Mortgage Rates

The volatility caused by the Brexit drove a lot of money into the U.S. Treasury market. This flood of money into Treasuries put downward pressure on interest rates. Since mortgage rates are tied to U.S. Treasury rates, the mortgage rates fell significantly. If you haven't refinanced your mortgage lately, a call to your lender might be worthwhile. 

No Long-Term Impact on Your Stock Investments

The one thing the Brexit will not mean is any significant impact on your long-term stock investments. Brexit will have short-term investment impacts, but over the long-run, the EU, UK, and US economies will remain just as interconnected as they currently are. There will be some changes and hiccups along the way, but ultimately, the three economies will still sell just as many products to each other as they otherwise would. You can read more about why Brexit won't have an impact on your investments.

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