Global conflicts, economic turmoil, trade wars, and tariffs. It can seem like the news media is constantly turning worldwide events and politics into sensationalist headlines that are difficult to ignore.
While there’s no doubt the world is filled with “big” news, giving too much credence to the chatter can leave you with a headache and a deep sense of worry about your finances. But acting emotionally where your investments are concerned is usually a bad idea.
Instead, your best course of action is likely to be blocking out the noise, staying calm, and remaining focused on your long-term financial goals.
Keep reading to find out how.
Volatility is to be expected, but history tells us that markets recover
So much has happened over recent years it can feel hard to keep up. The shockwaves started in 2008 with the global financial crisis, while 2020 saw the arrival of the Covid pandemic. A stock market crash in February of that year was followed by turbulent lockdowns and declines in international stocks and bonds markets.
More recently, the latest Israel-Palestine conflict has seen serious impacts in global trade and concerns over oil supplies, while the war in Ukraine has led to supply chain issues, increased energy prices, and impacted the availability of raw materials.
April saw President Trump announce a raft of import tariffs, leading to another stock market downturn and huge volatility, with many countries announcing retaliatory levies. The current situation is uncertain and ongoing.
These are just a few of the issues affecting stock markets and your finances over recent years. The key message, though, is that volatility is normal and, historically at least, markets rally. Staying calm and ignoring the noise is vital.
Ignoring the noise can help you stay focused on your long-term plans
Keeping calm and carrying on in the face of geopolitical turmoil and conflict might seem impossible. But there are some key ways you can try to rise above all the sensationalist chatter. Here are three of them.
1. Don’t check your investment values every day
This way lies madness. According to research from Schroders, 30 of the 52 calendar years prior to 2024 saw 10% falls in the world stock market. Despite these, the US market has delivered strong average returns for this period overall.
Daily check-ins aren’t a good indicator of market performance in the long term and could lead to you making panicked decisions to cash in your investment.
While cash might seem like a safer option, especially when markets are volatile, remember that cash is at the mercy of inflation and could leave you with an eroded fund and much weaker purchasing power. There’s also the opportunity cost of your missed returns to consider.
2. Ignore the latest investment trends
Trends are fleeting and the movement of the herd has no connection to your own goals. Sticking to your own plans and investment style will help you reap the longer-term rewards.
Buying and selling often isn’t a good idea – you’re trying to beat the market at its own game and that rarely works.
Schroders’ research, using almost 100 years of data from the US stock market, found that if you invested for a month, you would have lost money 40% of the time, taking inflation into account. But there were no 20-year investment periods where stocks lost money (again using inflation-adjusted terms).
Trends come and go, so stay calm and focus on your goals.
3. Remember, if your goal hasn’t changed, your plan doesn’t need to either
Unless something has changed for you in terms of long-term aspirations, then the strategy we’ve devised together can, and should, stay in place.
We’ll conduct regular reviews to ensure we’re up to date with any major changes in your life circumstances. We’ll also be there to help you keep you focused on your long-term goal, offering reassurance and peace of mind whatever is happening in world news.
Reviewing and revisiting is sensible, and not to be confused with knee-jerk reactions or emotional decision-making.
Get in touch
We’re on hand to track markets on your behalf and give you reassurance and peace of mind, helping you to stay calm, patient, and focused regardless of the media noise.
Please email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help you manage your long-term financial plans.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
