If you follow the news even a little bit, you’ve probably heard this new word Brexit being thrown around. It stands for British Exit. It means that the high ups from the United Kingdom have decided to leave the European Union. Why did they do that? In one word: freedom. You have to follow a bunch of rules and regulations concerning trading policies, borders, etc. to be a part of the European Union and Great Britain doesn’t want to do that anymore.
Yeah, so what? Well I’m not sure of all the effects that means but I do know this. According to Investopedia, the US invested $588 billion in UK in 2014 (http://www.investopedia.com/articles/markets/061616/how-brexit-could-affect-us-investors.asp). This means that if companies in the UK are affected by Brexit, it can affect the US investments in the UK. Because of Brexit, the stock market over the past couple of weeks has been up and down: BIGTIME. So you’re 401k, if you have is probably acting a little crazy as well. This affects the foreign currency rate too. The value of the British pound has dropped against the US dollar. So, for US companies that export their billions of dollars of goods to the UK each year, the demand for those goods can go down because they will be more expensive for UK customers. This can have a rippling affect that would probably require a whole essay! Don’t worry I’m not gonna go there.
Is there anything good about it? Possibly. If you want to take a trip to the UK, now might be a good time. Because of this, the British pound has dropped in value so the US dollar is worth more over there. After the Brexit voting happened toward the end of June 2016, one US dollar can get you from about .70 to about .75 at the beginning of July. There are good chances of it dropping more in the foreseeable future. Travelers from neighboring countries in Europe like France and Germany may not want to travel to the UK because immigration processing makes take longer since these countries are part of the European Union. This in turn could mean discounts at hotels, restaurants, and sightseeing places for businesses to attract more tourists. Among other things, I’d recommend checking out Madame Tussauds wax museum and take selfies with your favorite celebrities.
Finally, because the stock market is volatile and no one is quite certain exactly how this can affect the US economy, interest rates here could stay that same or go down further. They’d go down because the high ups over here would want us to continue to spend our money and use credit cards to keep our economy operation. You know what else low interest rates mean…..hello REFINANCE my home! Refinancing to a lower rate could reduce your monthly mortgage payments and depending on the type of loan you have could get rid of a separate Private Mortgage Insurance payment. My motto is to view the glass as half-full. Something that may seem like chaos and create panic may also create an opportunity. You just have to look….or Google it, lol!