From Russia’s invasion of Ukraine to Trump’s tariffs and the Israel-Palestine conflict, geopolitical tensions have been high over the last few years.
More recently, the Middle east crisis has seen a high human cost as well as global economic uncertainty.
Concern is only natural. World politics affect us all, but where your long-term financial plans are concerned, it’s important to avoid emotional knee-jerk reactions and stay focused on your goals.
Keep reading to find out more.
A study finds that geopolitical tension can lead to changes in investor behaviour
LV= recently reported that 7% of Baby Boomers had reallocated funds into lower-risk accounts in the 12 months to March 2026. Around 6% of Generation X had made the same decision.
The report found that Generation X are the most likely to change their financial plans in response to external conditions (41%), including geopolitical tensions. This compares with 36% of Baby Boomers.
Broadly speaking, Gen Xers are aged 46 to 61 (as of 2026), while Baby Boomers are 62 to 80.
At Globe IFA, we have decades of combined experience dealing with global markets. That means we can provide reassurance, as well as historic data, to help you to stay calm when external factors are at play.
3 financial benefits of staying calm
1. You’ll still be invested when the market recovers
While values rise and fall daily, markets trend upwards over the long term.
Here’s the MSCI World Index since 2008 to illustrate the point:
Source: Business Insider
While there are obvious dips to coincide with, among other events, the coronavirus pandemic, the Russian invasion of Ukraine, and President Trump’s so-called “Liberation Day”, the long-term trend is clear.
Had you made an emotional decision to withdraw funds during, or immediately following, any of these events, you would have cemented your loss and not been invested when the markets began to rise again.
Your financial plan and investment strategy are designed with short-term market volatility in mind. It’s the reason your plans and investment time frames are 5, 10, 20 years, or more – so your fund has time to recover from these occasional, yet expected, drops.
Schroders data confirms that investors who shifted to cash after the first 25% fall during the 1929 Depression would only have broken even in 1963. Those who stayed invested were back in the black 18 years earlier, in 1945. Investors who made the same shift to cash in 2008 have yet to break even. Those who remained invested recovered just four years later.
2. You can take full advantage of compound growth
Staying calm and keeping your money invested maintains your healthy fund. The larger your fund, the greater the benefit you will see when markets rise, thanks to the effects of compounding.
As a reminder, compounding is simply growth on growth. Say you invest £1,000 and it grows 5% in the first year – you’ll have £1,050. A gain of £50.
The next year, your potential 5% return will apply to £1,050. The same percentage increase will provide a gain of £52.50.
While this might not seem like a huge increase, the effect snowballs over time. For this reason, you’ll want to keep your fund as healthy as possible, and that means relying on the adage:
It’s time in the market, not timing the market, that counts.
3. You won’t need to alter your plan unless your goals change
Market volatility can be worrying, but chasing trends or trying to time the market is generally not the way to reach your objectives.
Your long-term plan is already aligned to your goals, timescales, and risk profile. Your risk is further spread through diversification – the splitting of funds across asset classes, sectors, and geographical regions. It is hoped that a drop in one class or sector will be offset by a rise in another area.
All of which means that unless you are very close to your investment goal, geopolitical crises and market drops shouldn’t be detrimental to your plans in the long term.
If your objectives haven’t changed, then your plan doesn’t need to either. All you have to do is stay relaxed and focus on your long-term goals while enjoying the present.
Get in touch
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.
