3 ways I plan to get rich from a UK general election

The uncertain political environment may leave many investors not knowing where to turn. But don’t despair, Royston Wild explains how to make money from any upcoming election.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

We’ve not crossed the political Rubicon just yet, but it appears as if another British general election is just around the corner. It’s hard to remember a government in such a state of extreme paralysis as this one. Its decision to purge 21 Tory MPs this week wiping out Boris Johnson’s majority in the Commons and leaving him with a lame duck premiership.

Labour might not be taking the bait yet as it prioritises legislation to avert a no-deal Brexit, but it appears a matter of time before it acquiesces to Johnson’s call to go to the country. The government defeats in Westminster are mounting and the chaos in Downing Street is rising (just today the PM’s brother Jo Johnson resigned from cabinet citing conflicts “between family loyalty and the national interest.”). Something has to give…

Avoid the pound

Now the pound’s clawed back some ground in recent days following the passing of the Benn bill to block a disorderly Brexit. Indeed, it’s staged its best two-day performance in almost a year since the Commons started debating the bill on Tuesday.

But of course there’s plenty of scope for it to fall again should an election be called. A Boris Johnson majority would likely guarantee a no-deal EU withdrawal. A Jeremy Corbyn majority would spook markets who consider him to be the ‘anti-business’ candidate. And a hung parliament would prolong the deadlock of the past three years.

So how can share investors play a falling pound? By investing in companies which report in dollars, euros or, indeed, any other foreign currency which receive a profits boost from a sinking sterling. Alternatively you can buy into a FTSE 100 tracker fund and ride likely rises in a stock index that’s chock-full of firms which account non-British currencies.

Go for gold

It’s also a good idea to get some exposure to gold as an election approaches. The flight-to-safety asset surged to fresh six-year peaks around $1,560 per ounce earlier this week and is back on the charge again on Thursday following some light profit-taking.

There’s numerous ways to grab access to gold. You can buy the physical metal itself or buy into an exchange-traded fund (ETF) which follows movements in the price. I reckon, though, buying up precious metal producers such as Polymetal International or Fresnillo, or an ETF comprising a variety of gold stocks, is a better bet. The reason? The additional sweetener of dividend payments.

Play the safe havens

The uncertain political (and economic) landscape means demand for so-called safe haven stocks is likely to hot up too. And the FTSE 100 is jam-packed with lifeboats for scared investors.

Take Unilever and Reckitt Benckiser for example, household goods manufacturers which provide tremendous strength by diversification (via product categories and geography). Or how about United Utilities and Severn Trent, firms whose services are essential regardless of who claims the keys to Number 10? Investor demand for BAE Systems is also likely to pick up given its leading position in the defence sector, that classic safe haven in troubled times.

The answer is clear. Don’t sit in silence and try to wait out the current political turbulence. There’s plenty of ways to make money from an upcoming general election.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild owns shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Fresnillo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »