How will the US Tariffs affect my money?
President Trump recently announced tariffs across all trading partners. These tariffs were higher than expected, which has affected global markets. But financial markets and share prices change all the time. When their value falls that can impact the value of investments like ISAs, pension savings and drawdown.
The past few years have been particularly challenging, with Brexit, Covid, the Russia/Ukraine war and political events in the UK all sparking market volatility. When markets fall like this, it can be tempting to withdraw your money to protect it. But this might mean selling your investment at a loss. It's also important to remember that investments are long-term and designed to ride out these ups and downs. Here we look at how the US Tariffs can affect your money and what you can do to reduce the impact.
What impact will the tariffs have on my investments?
Stock markets were shaken by the announcement of the tariffs. So you'll have probably seen a drop in the value of your investments over the last few days. Stocks and shares ISAs are designed for long-term investing - at least five years - and should balance out the highs and lows. When markets fall like this, it may be tempting to withdraw money to protect it. This may cause you to sell your investment at a loss. Which may have been avoidable if you held the investment for the long term. Although, staying invested means changes in financial markets will continue to affect your investments and current values aren't guaranteed.
Pension Tax Calculator
Use our handy tool to calculate how much tax you might have to pay when taking cash out of your pension savings.
Useful links
- Before you start to access the money in your pension pot, you should get a clear idea of how much tax you'll pay on your retirement income. Our Pension Tax Calculator can help with that.
- If you're over 50, book an appointment with Pension Wise for free, impartial guidance.
- It might be a good idea to speak to a financial adviser. If you don't have one, you can find one at Unbiased.
How will the tariffs affect the value of my pension?
A pension is a good example of a long-term investment. You’ll probably be paying into it for a few decades. Over the years you can expect to see its value go up and down in line with broader market movements. Right now, if you have a defined contribution pension, you might have seen an impact to its value.
Our Workplace Product Strategy & Proposition Manager, Michael Porter spoke about this recently on our podcast A Little Bit Richer:
"The last few years, we've seen quite a lot of market turbulence, as we would call it. So that's where investment markets have gone up and down. We've had a lot of political uncertainty. But the main thing to note is that your pension savings are a long- term investment, over 30, 40 years. You might expect to see your pension savings go down in the short term, but history shows us that over the long term, they tend to do quite well from a performance perspective. But again, it's not guaranteed, and can still go down and you might actually get back less than you put in, but typically, they will grow."
What can I do?
- Stay focused on your long-term goals.
- Stability is important, and continuing to pay into your investment products is generally a good idea too.
- Diversification of your investments means you're not relying on the performance of one investment.
- If you’re thinking about accessing your pension savings and turning them into retirement income, it’s more important than ever to think about guidance or advice before making any decisions about drawing your tax free cash and pension savings.
Related articles
Looking after your pension in times of uncertainty
Can I opt out of my pension?
