Investment Implications of BREXIT

Citizens of the United Kingdom (UK) voted in a referendum on Thursday to decide whether the UK should remain a member of the European Union (EU). In an unexpected outcome, UK voters chose to leave the EU, coined BREXIT, an unprecedented decision in the history of the EU. Global equity markets had rallied strongly in the days leading up to the vote on anticipation that UK voters would choose to remain a part of the EU. When the results of the vote were announced on Friday, global equity markets sold off sharply, largely reversing the gains from earlier in the week, and global currency markets were roiled, most notably the British pound. For investors, the focus now shifts to the ultimate implications of the UK preparing to leave the EU and the potential long term impact on the global economy and capital markets. Below we outline our current assessment of short, intermediate, and long term considerations for investors in the context of this historic geopolitical event.


We expect today’s market capitulation in response to BREXIT to be short lived as the strong gains of recent days in anticipation of a ‘Yes’ vote to remain in the EU are being unwound with the announcement of the ‘No” vote. From an economic perspective, we expect the short term impact to be limited in both the UK and globally as the process of the UK leaving the EU will be a multi-year process. The severity of the selloff in financial markets around the world today largely stems from markets mispricing the risk of a BREXIT. While global equity markets were volatile this week, the strong gains early in the week that preceded today’s steep losses left key equity market indices in the U.S. slightly down, the U.K. positive, and Europe negative for the week. See table below for details. We anticipate minimal near term impact on the global economy, including in the UK, due to this vote as the UK has at least two years to negotiate the terms of its withdrawal. Further, the UK never fully integrated into the EU, as it was not a member of the European Monetary Union. While the UK had favored trading status in the EU, the country did not adopt the euro (and instead has maintained the British pound). By maintaining its own currency and monetary policy, the UK has greater flexibility to manage the uncertainty created by the outcome of this vote, and the Bank of England has already pledged to provide support to the UK financial system.


We anticipate that the results of the UK referendum will reverberate across the global political landscape in the months and years to come. The political environment in several developed countries, including the US, have witnessed the rapid rise of outsider, populist candidates promising sweeping changes to their countries’ social and economic structures. Across developed nations globally, including the US and Europe, slow economic growth, stagnant wages, and growing income inequality have fueled voter backlash against establishment politicians and economic policies. In response, populist politicians are drawing widespread support based upon economic platforms tied to limiting the free flow of capital, goods, and people, traditional hallmarks of capitalism. The uncertainty created by the global political environment is likely to result in continued capital market volatility over the intermediate term.


The potential long term implications of BREXIT are the most critical for investors to assess in the months and years to come. If the UK decision to leave sets a precedent for other countries within the EU to do the same, the ultimate viability of the EU will be at risk. As the largest economic region globally (see table below), a disintegration of the EU would likely result in significant economic dislocation in Europe with reverberations felt around the world. The ultimate path of the EU remains unclear, but it is likely to be a dynamic situation that investors will need to monitor closely. The uncertainty emanating from the UK decision to exit the EU will present a unique combination of risk and opportunity for investors to navigate in the years and decades to come.


The Investment Committee of Freedom Capital Management Strategies® continues to monitor this dynamic situation closely and is actively assessing both the short and long term implications for all of our actively managed investment strategies. We will communicate with you proactively during this period of heightened uncertainty and will keep you informed of any changes made within the investment strategies that we manage on your behalf.

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How to Ensure your Retirement is a Happy One

How to Ensure Happy Retirement

Retirement is something that not nearly enough people give much thought to – until they find it bearing down on them at full speed. When properly planned for though, your retirement years can be some of the best years of your life. Below are a few handy tips that will help make your retirement years as happy and stress-free as possible.

Pay Off as Much Debt as Possible Now

Chances are that when you retire, you will not have nearly as much disposable income on hand to get you from month to month. If you currently have debt of any sort, now is the time to do everything possible to repay it in full. Not only will you save a ton of money on interest charges; you will be able to free up as much money as possible to live on during your golden years. Another benefit of ensuring that your debt is repaid before retirement is that you won’t have to deal with the stress that usually accompanies borrowing money.

Save as Much as Possible Now

Saving for your future applies regardless of whether you are in your 20s and just starting to climb the career ladder or you are in your 50s and are facing the prospect of retirement in the next few years. According to a report released by the Schwartz Center for Economic Policy, up to 75% of people close to retirement only have around $26,000 on hand to live on after stopping work – definitely not enough to live on for more than a few months at most.

The earlier you start saving, the less you will have to save each month, thanks to compound interest. If you’re in your 20s, saving 10% to 15% of your income will normally suffice, but if you only start saving in your 40s, you will end up having to sock away as much as 40% to 50% of your income in order to merely survive during retirement – definitely not a fun prospect.

Spend Wisely

While your retirement years are supposed to be about having fun, this doesn’t mean that you should book back to back around the world cruises – unless you can truly afford to, of course. If you will still be paying off your mortgage during these years, ensure that the instalments don’t cost more than 20% of your monthly expenditure. When going on vacation or spending money anywhere else, be sure to ask about senior citizen discounts. In many cases, you could save up to 50% off the original cost of items such as guided tours, restaurant meals or even some medical services. Once you reach the golden years, you may even find that services you used to pay for before are now free.

Planning ahead financially will help ensure that you are able to enjoy yourself as much as possible after you have stopped working. If you would like to find out more about how you can make your money work for you after retirement, contact us today.


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Enjoying a Balanced Life during Retirement Will Be Important

Enjoying a Balanced Life

When the topic of retirement is brought up, most people only associate it with being able to take care of your financial needs after you have stopped working. However, there are far more facets than just money to consider during retirement. For a start, it is imperative that you enjoy a balanced life as far as possible during this part of your life. Below are a few tips that can help in making this a reality.

Remain Physically Active

As you grow older, it is important to remain as physically active as possible. Although you may not be able to run a marathon, you may still be able to enjoy taking a brisk walk through your neighborhood, go swimming, play golf or even join a gym class a few times a week. Not only will this ensure that you stay physically fit and healthy for as long as possible; it will enable you to get out of the house and spend time in the company of other like-minded people.

Don’t Withdraw from Social Interaction

Upon retiring, many people find that they miss the social interaction that they had while working in the corporate world. If left unchecked and you withdraw totally from social interaction, you could find yourself feeling lonely and depressed, which, over the long term, will have a detrimental effect on your health. As a result, it is essential that you make a plan to get out of the house at least a few times a week. Consider joining social groups aimed at things which interest you. This can include a computer class, sewing group, book club, dinner club or just about anything.

Consider Learning Something New

Although you will technically not need to learn anything new after retiring, doing so will help keep your mind sharp for as long as possible. Many community colleges and learning institutions offer an array of free or inexpensive courses ranging from beekeeping to shop classes. Some schools even allow adults to join classes if there are vacant spots available as well – it never hurts to ask. In addition to learning something new, you could even use your new found skills to earn a little side income during retirement.

Keep your Financial House in Order

Along with enjoying yourself as much as possible during your golden years, it is essential that you keep track of your financial situation. If you are not comfortable dealing with money matters, it may be necessary to enlist the help of a qualified and experienced financial advisor who will be able to guide you. This will help protect your nest egg and ensure that you have enough to live on throughout your retirement.

When seeking the help of a financial advisor, it is crucial to use one that is registered and who has a good reputation in the industry. If you would like to learn more about protecting your assets and making them grow and work for you, contact us today.


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Conservative Ways to Invest Your Retirement Money

Conservative Ways to Invest

When it comes to retirement funds, the more diverse your investments, the better. However, not everyone has the funds available for higher-risk investments, and that’s why many people choose conservative methods. Here are a few ways for you to invest and manage your retirement money conservatively.

Real Estate

Even though the federal reserve has upped the prime mortgage rate this year, the truth is that real estate – especially in certain markets – is still one of the safest investments out there. However, it’s important for buyers to be savvy shoppers; you’ll need to grab a great deal when you see it and then hold on to it as the property value appreciates. Some of the best markets for real estate appreciation right now are Grand Rapids, Michigan; Orlando, Florida; San Antonio, Texas; Charlotte, North Carolina; and Salt Lake City, Utah.

Savings Bonds

Savings bonds are sold by the United States government, and most people consider them one of the most conservative investments available today. Essentially, you “loan” the government your money and receive a savings bond as an IOU. You can keep your savings bond for a period of up to 30 years, at which point you’ll need to cash it out in order to preserve its value. Although you can cash in your savings bond after just a year in order to collect its face value plus interest, it’s best to let it ride for the full 30 years, if possible. The risk associated with savings bonds is very, very low, but the potential earnings are capped.

Individual Retirement Account

Anyone and everyone should have an individual retirement account, or IRA. There are two different types from which to choose: the traditional IRA and the Roth IRA. Roth IRAs have income eligibility restrictions and offer no tax break for contributions, but anything you earn or withdraw is usually tax-free. What’s more, you must take minimum distributions at age 70 ½ if you have a traditional IRA, whereas you are not required to take any distributions if you have a Roth IRA. It’s important to do some research before you decide on which IRA is best for you, but having one is important since it will be the basis of your retirement.


Your employer’s 401(k) plan is by far the safest and most profitable way to invest your retirement money. You should, at the very least, contribute the maximum amount that your employer will match; otherwise, you’re missing out on the opportunity to earn free money. Remember that there are penalties for withdrawing funds from your 401(k) account early, but if you have a great return on your investment thanks to employer matching, a 401(k) is the way to go.

Of all of these different investments, real estate is probably the riskiest. Even then, if you choose your property carefully, you can manage that risk successfully. A diverse retirement portfolio can help ensure that you have the funds you need when you reach retirement age, so be sure that you don’t put your eggs all in one basket. Consider all of these conservative investments, instead.

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Retirement Mindset as You Make Your Way through Your 20s, 30s, 40s and 50s

Every young adult feels like retirement is a lifetime away, but it approaches much more rapidly as you age. The key to creating a sizeable nest egg is starting early. Keeping retirement in mind with a few simple steps through each stage of your life will help you create a retirement fund that will keep you living comfortable into your 60s and beyond.


Securing your company’s full 401 (k) match program is one of the smartest money decisions you can make in your 20s. When you enroll in a matching savings program by age 25, you greatly reduce the amount you need to save on your own by up to 50% less than you would need to save if you wait until your 30s. During your 20s, you should also ask for a $5,000 raise to help increase your earnings by over $600,000 throughout your career. Studies suggest that the highest raises are awarded between ages 25 and 35, making this an optimal time to obtain a large raise.


One of the best retirement decisions to make in your 30s is to stop accruing debt. Pay out of pocket whenever possible and pay off old debts with any bonuses, overtime pay and tax returns. Avoid extravagant spending, from dining out to purchasing high end leisure items, whenever possible, only splurging once in a while. Adopting a frugal lifestyle at this age can help you maintain frugal habits in retirement as well as curb your spending to help you save even more money in the long run.


Although mastering a new skill does not sound like part of a retirement mindset, consider the fact that women tend to reach their peak pay by age 39 while men reach theirs by age 48. Making yourself invaluable with a greater skill set not only provides you with more job security to keep filling your retirement account, but also with potential new opportunities based on that skill set. As young children grow up and move out of the house, it is also a good idea to move monies typically spent on their expenses into retirement savings, when applicable.


Catching up your savings to account for any wide gaps is a good strategy in your 50s. At this point in your life, you should have paid off most, if not all, of your debt, from student loans to mortgages, which frees up your income to be deposited into your savings account. Use your extra cash to add a few thousand dollars into your 401(k) and IRA accounts each month to give your savings a steady bulking up during this decade. Ten years from retirement, consider using a Roth account to help you save a higher, tax-free amount of money for retirement.

Remember that one key to saving well is to make it as easy as possible. Set up automatic contributions to your savings whenever possible so you do not even notice any money your check is missing while you make the process easier on yourself. Make a budget and stick to it to wisely manage your money throughout your life and into retirement.

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