0161 973 9150

3 Things to Remember During Times of Volatility

Gresham Wealth

As humans, we are hard-wired to respond emotionally to change. As a result, the return to volatility in markets has understandably unsettled many investors. With high inflation, rising interest rates and the ongoing conflict in Ukraine, stock markets in the UK and across the world have suffered.

While volatility can be disconcerting, making any emotionally driven decisions regarding your investments can make matters worse in the long run. 

Here we look at three key points to keep at the forefront of your mind during turbulent economic times. 

What goes down must come up again

It’s important to remember that downturns are a perfectly normal part of the economic cycle, and whilst drops in the value of your investments may be alarming, there will almost always be a recovery at some point. Following historic downturns, markets that have fallen have gone on to not only recover but also reach new highs. A prime example of this is following the Covid-19 pandemic. In the period following March 2020, we saw one of the most dramatic crashes in stock market history. Despite this, the stock market rallied much quicker than expected, and new highs were reached by the end of the same year. Whilst the current ‘cost of living crisis’ and the war between Russia and Ukraine do not appear to have an end in sight, history shows us that bear markets (where stocks are underperforming) tend to be short-lived, lasting less than a year on average.

Staying invested usually proves to be the best strategy

Understandably, it can be alarming when the value of your portfolio takes a dip. It may be tempting to consider withdrawing funds or switching to less risky investments to protect values from falling further. However, in doing so, you will realise losses, rather than giving your investments the best opportunity to recover and grow. Research has shown that the best long-term strategy is to stay invested and wait for the market to recover. This way you won’t miss the better days in markets.

Financial advice can help to maintain perspective

As an individual investor, it is hard not to let emotions drive your investment choices, however, with the guidance of an experienced Financial Adviser,  it is possible to retain perspective and a long-term view. This allows for a more level-headed approach which can avoid the compulsion to react to dips in the market.

Furthermore, an independent Chartered Financial Adviser can help you to build a diversified portfolio – investing across different asset classes, geographical regions, and industry sectors. By approaching an investment portfolio in this way, investments are less likely to respond in the same way to market forces at the same time, reducing the peaks and troughs experienced and therefore resulting in smoother investment experience overall.  

We have written before on how to ride out periods of volatility in the market. This advice remains as relevant as ever.

For more information or to speak to one of our financial advisers regarding your investment portfolio, please get in touch.

I am only in this position because of you. One of the best decisions I have ever taken going with GWM.

With great thanks for all your reassuring attention over the last year. It means more to me than I can express in a few words.

I just want to thank you and your team so very much for all you do for me throughout the year. It is a real comfort to know that my investments are in such capable hands. I literally couldn’t do it on my own.

We are both very grateful for the time you spent with us in explaining various options. We certainly feel we now both have a much better understanding of our situation & the decisions which we need to consider moving forward.

Thanks again for your advice, you have given me the kick I needed to take control and I’m very grateful for that.

We feel we can phone at any time during office hours if we need anything clarifying. Our financial adviser knows our personal circumstances and is in tune with our goals and lifestyle. His advice has been and continues to be excellent.

You’ve solved that dilemma for me… Thank you for being so clear and honest as always.

A very personalised service… All advice is tailored to my needs with great consideration to issues I may not have thought of myself. I feel confident about my future finances.

Thank you so much again for your time and brilliant advice.

Just a big thank you for all you have done for our family. We do appreciate it.