When markets are volatile, it might feel like a good idea to change how you split your money between different types of investments. For example, if shares are falling, you might be tempted to move your money to safer options. It’s a natural reaction, but it’s important to think carefully before making any big changes.

First, remember that if your portfolio aligns with your goals and how much risk you can handle, it should be able to withstand market volatility. It can be hard, but history shows that doing nothing is often the best approach. Many investors who stayed patient during big market drops saw their investments recover and grow over time.

But staying the course doesn’t always mean standing still. Big market shifts might mean it’s time to rebalance your portfolio. For example, if shares perform really well and bonds underperform, the proportion of shares in your portfolio will naturally increase, making your portfolio riskier. Bonds, which are like loans you make to companies or governments, are usually more stable than shares because their prices don’t swing as much, but they also tend to give lower returns.

In this instance, buying more bonds and selling some shares can help you get back to your original asset allocation, but remember that the value of investments, and the income from them, may fall or rise and you may get back less than you invested. If you’re not confident doing the rebalancing yourself, our LifeStrategy funds and Managed services will do this for you.

It can also be a good idea to review your investment mix if your goals or risk tolerance have changed since you first started investing. For example, if you find yourself feeling really worried during market drops, it could be a sign that your asset allocation is too aggressive and that you need to take less risk.

If you’re getting close to a big goal, like retirement, it can also make sense to take less risk, and this is true regardless of market conditions. You might want to gradually shift your investments from shares to bonds as you get closer to your target retirement date – or invest in a fund that does this for you. 

The most important thing is to stay calm, focus on the long term and make decisions based on what’s right for you, not what’s happening in the market right now.

Though a fact of life when it comes to investing, falling markets can make us feel uneasy and like we need to do something to protect our investments.

But what you do – or don’t do – when turbulence hits can have a significant impact on your portfolio. For instance, when you see your investments drop, it might be tempting to move to cash to avoid further losses. But our research shows that staying invested tends to reward long-term investors.

It’s important to remember that markets go through cycles: they go up, and they go down. You may feel better after moving to cash, thinking you’ve avoided a loss. But markets can bounce back quickly, and if you miss the recovery, you could end up with less money than if you had stayed invested. By remaining invested, your portfolio could recover and even grow over time.

Another factor to remember is that time in the market is more important than trying to time the market. Predicting when the market will hit its lowest point or when it will start to recover is almost impossible.

Instead, staying invested for the long-term will usually give you the best chance of achieving your financial goals. Think of it like a marathon. You don’t win by sprinting at the beginning and then stopping; you win by maintaining a steady pace and finishing the race.

You are likely to experience many market dips in your investing lifetime, but if you have a well-diversified portfolio and a solid investment plan, sticking to it and riding out the dips is usually the best approach.

If you’re about to retire, a downturn in the stock market can feel really worrying. It’s natural to be concerned, but there are things you can do to protect your investments and keep your retirement plans on track.

First and foremost, stay calm. Market downturns are a normal part of investing, and they don’t necessarily mean your retirement plans are in trouble. Try to stay focused and avoid making hasty decisions based on what’s happening in the market right now. Panicking often can do more harm than good.

Next, take a step back and think about your retirement goals. What do you really want your retirement to look like? Ask yourself what’s most important to you. You might be able to make some changes, like spending a little less each month, at least in the short term, or working for a bit longer. Delaying your retirement can give your investments more time to recover, and you’ll have longer to keep paying into your pension too.

Think about other ways you could fund your retirement. Do you have other sources of income that you can use until your pension recovers? Maybe rental income, cash savings or a side business.

The way you take money from your pension could also affect how long your savings last. If you can be flexible with your spending, rather than taking a fixed monthly amount, you could adjust how much you withdraw based on how the markets are doing. This can help your pension last longer and protect it from market drops. For example, if the market is down, you might take out less money and live a little frugally for a while. But if the market is up, you can afford to take out a bit more.

By staying calm, reviewing your goals and carefully thinking about your next steps, you can handle the market’s ups and downs with confidence and enjoy a secure and fulfilling retirement.

Buying shares when stock markets have fallen can be a good long-term strategy because it allows you to take advantage of lower prices.

This might feel counterintuitive because it’s natural to want to buy when everyone else is excited and prices are soaring. But high prices can mean less potential for future gains.

On the other hand, lower prices mean you can get more shares for your money, and you might see bigger gains when the market recovers. For example, when the price of US shares drops, it generally means that we’d expect their future return to go up.

But be ready for the possibility that the market could stay down for longer than you expect. If you buy during a market dip, you might experience further losses before you eventually see gains. 

History shows that the market does eventually recover from downturns, but it’s important to have realistic expectations. Markets are unpredictable, and a quick rebound isn’t always guaranteed. It’s important to be patient and stay committed, especially if the market continues to fall.

You should also think about how much risk you can handle. If your goal is just a few years away, or you’re feeling really worried about the market, increasing risk by buying more shares probably isn’t the right thing to do.

But if you're comfortable with risk and you’re investing for a long-term goal, like retirement, buying more shares when prices have fallen could help you build a stronger portfolio over time, even if it feels a bit nerve-wracking. 

In summary, while it might go against your gut instincts, buying during market dips could work in your favour in the long run. Just make sure your investments align with your goals and risk tolerance, and stay committed to your plan.

If you’re investing for your children and the stock market has fallen, it’s natural to feel a bit worried. But there are several steps you can take to keep your child’s financial future on track.

First and foremost, stay calm. Market downturns are a normal part of investing, and they don’t necessarily mean your child’s financial future is at risk. Try to stay focused and avoid making hasty decisions based on what’s happening in the market right now. Panicking can often do more harm than good.

Next, think about how long it will be before the money is needed. If your child is very young and you want to help them onto the property ladder in a couple of decades, there’s still plenty of time for your investments to recover from market drops. Selling when the market has dropped will lock in your losses, whereas the market tends to recover and grow over the long term. Sticking to your investment plan is more likely to maximise your savings. 

But if you have a shorter-term goal – perhaps you want to pay for your child’s university education in a few years’ time – you might want to be a bit more cautious. You can reduce investment risk by investing more of your money in bonds and less in shares. 

Bonds are like loans you make to companies or governments. They’re usually more stable than shares because their prices don’t swing as much. Adding more bonds can help protect your investments as you get closer to your goal, but remember that the value of investments, and the income from them, may fall or rise and you may get back less than you invested.

By staying calm and carefully thinking about your next steps, you can handle market downturns with confidence and ensure your child’s financial future stays on track. If your goals haven’t changed, doing nothing and sticking to your investment plan is often the best course of action.