What the Uncertainty in Europe Means for Your Financial Planning

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On 17th June, the Greek people return to the polls, following the uncertainty caused by the lack of a definite result in the May elections. What will happen in June? No-one knows.

Much has been made of the possibility of Greece leaving the euro - the 'Grexit' as it has been dubbed. European leaders don't want Greece to leave as they fear the consequent upheaval and the possibility of Spain, Portugal or Ireland following Greece out of the door. But the Greek people don't appear to want to accept the austerity measures Europe is proposing. If this is reflected in victory for Alexis Tsipras and his coalition of the radical left on June 17th, then there is every possibility that the 'Grexit' could become a reality.

What does all this upheaval and confusion mean for your financial planning? You might be forgiven for thinking that the only sensible course of action is to live for today. Spend all your money because there doesn't seem to be much point saving or investing any more.

Sadly, certain events are not going to be affected by what happens in Greece:

  • You're still going to get older
  • There's still going to be a time when you're not able to work
  • If you have children, they're still going to need educating
  • Your mortgage will still need paying

So tempting as it may be to pull the covers over your head and hope that the problems will just go away, there is still a need for financial planning. In fact, the crisis in Greece and the uncertainty in Europe make financial planning much more, not less, important.

Above all, this is where a good independent financial adviser comes into his or her own. As someone once said, "In times like these it helps to remember that there have always been times like these." Whether it was the South Sea Bubble, the Wall Street Crash or the more recent banking crisis, economics - and the performance of stock markets - has always been cyclical. Markets rise and fall, and always will do.

That's why working consistently with your IFA is so important. It's easy to get depressed by short term falls and think the best place for your money really is the mattress but your financial adviser will be able to suggest ways in which your savings or investments can be protected against sudden falls in stock markets.

He'll also know that just because Europe is struggling, it doesn't necessarily mean the same is true for the rest of the world. Over the past few years, there have been excellent returns from markets in the Far East and Latin America, and your IFA will be aware of funds and fund managers that have performed well in these areas.

So while the current uncertainty in Europe is a worry, it is not the end of the world and sadly, it won't stop any of us getting older. Life goes on and your need for good, consistent financial planning doesn't change. By working with your IFA and having regular meetings to review the progress and performance of your investments and savings, you can make sure that short term uncertainties don't damage your long term financial wellbeing.