Introduction
Angus Kirk, an independent Financial Planner at Transform FP, uses long-term investment data to explain why staying calm during periods of volatility often leads to better financial outcomes. In uncertain times, perspective is a powerful ally.
Weathering the Storm: Why Perspective Beats Panic
If the last few years have taught investors anything, it’s that uncertainty is always around the corner. From the dramatic sell-offs in early 2020 at the onset of the Covid-19 pandemic to the market turmoil triggered by the war in Ukraine, volatility has become a familiar feature of the investment landscape.
It’s entirely human to feel uneasy when headlines are bleak and portfolios dip in value. But it’s precisely in these moments that discipline — not reaction — can make the greatest difference to your long-term outcomes.
While there are certainly times when reviewing your investment strategy is appropriate, making abrupt changes in response to short-term movements rarely ends well. Instead, consider these three compelling pieces of data that highlight why holding your nerve can be a smarter choice.
1. Long-Term Investing Reduces Risk
Markets are volatile by nature. But one of the most reassuring truths is that the longer you remain invested, the lower your chances of losing money.
In the short term, price swings can feel dramatic. A sharp drop over a week or month may prompt emotional decisions. But stretch your horizon to five, ten, or twenty years, and those short-term fluctuations tend to fade into the background.
Analysis from Schroders illustrates this vividly (see chart below). The probability of a loss decreases the longer you remain invested, particularly when compared to holding cash. While cash may feel “safe”, it erodes in value over time due to inflation — especially when interest rates fail to keep pace with the rising cost of living.
Source: Schroders
What this means in practice is simple: when volatility strikes, staying invested can actually help reduce your long-term risk. Provided your portfolio reflects your personal risk tolerance and time horizon, patience is often rewarded.
2. Markets Have Consistently Rebounded From Global Shocks
It’s easy to view each market crisis as unprecedented. And indeed, many are — in the moment. But history shows us that downturns, corrections, and even recessions are not unusual. In fact, they’re a feature of investing, not a flaw. Looking back over the past 30 years, investors have had plenty of reasons to worry. From the dot-com bubble and the 2008 financial crisis, to Brexit, trade wars, and the pandemic, global events have repeatedly triggered temporary declines in stock markets. Yet, as a long-term trend, markets have continued to grow.
Source: Bloomberg, Humans Under Management.
The above chart from Bloomberg, tracking the MSCI World Index since 1988, reveals a pattern: markets fall — sometimes sharply — but they recover. And often, they recover sooner than expected. It’s a powerful visual reminder that negative headlines don’t necessarily equate to long-term financial harm. Consider also that a 10% drop — known as a market correction — is more common than many realise. In fact, Schroders notes that the US stock market has seen such a correction in 28 of the past 50 years. Despite this, average returns over the same period have remained strong — around 11% annually. Investors who stay invested through these events, rather than withdrawing or attempting to reposition, often emerge in a stronger position than those who react.
3. Timing the Market Is Incredibly Difficult — and Costly
One of the most persistent temptations in investing is the urge to “get out before it gets worse” and re-enter when things stabilise. On paper, it seems logical. In practice, it’s almost impossible to execute consistently. Missing just a handful of the market’s best-performing days can severely damage your long-term returns.
Schroders analysed returns from the FTSE 250 between 1986 and 2021. An investor who stayed fully invested over the entire period would have seen £1,000 grow substantially. But missing only the best 30 days wiped off almost £33,000 in gains.
Source: Schroders
These high-return days often occur shortly after periods of intense volatility — the very time many investors are most likely to withdraw. The lesson is clear: attempting to time the market perfectly is not only extremely difficult, but missing out on even a few crucial days can set your investments back by years. “It’s time in the market, not timing the market,” as the saying goes — and the data backs it up.
“Trying to time the market can feel empowering in the moment, but it’s usually just guesswork. The most successful investors aren’t fortune-tellers — they’re the ones who remain disciplined through every cycle.”
— Shadi Kirk, Independent Financial Planner, Transform FP
Build a Strategy That Reflects Your Goals and Tolerances
The data highlighted above offers a compelling argument for composure, not panic. But staying invested is only effective if your portfolio is aligned with your individual goals, time horizon, and tolerance for risk. Volatility may still test your nerves — but with a strategy designed around you, it becomes easier to hold firm when markets wobble. That’s where financial planning plays a crucial role. Whether you’re just starting your investment journey or reviewing a long-held portfolio, ensuring your investments reflect your life priorities is the foundation of good decision-making.
Conclusion: Stay Calm, Stay Focused, Stay Invested
Investing is emotional — and volatility can trigger fear. But short-term movements shouldn’t override long-term thinking. History, data, and behavioural insight all point in the same direction: reacting emotionally during turbulent times is often more damaging than staying the course.
That doesn’t mean you should ignore your investments altogether. Regular reviews, rebalancing, and revisiting your goals are all vital. But change should be made deliberately — not defensively.
Speak to Us About Staying on Track
If market headlines have made you uneasy, or you’re unsure whether your portfolio still reflects your needs, we’re here to help. With a calm, evidence-based approach, we can help you stay focused on what matters most — your long-term financial wellbeing. Get in touch to arrange a conversation with one of our advisers.
Important disclaimer: This article is for general information only and does not constitute financial advice. The information is aimed at retail clients only. The value of your investment 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. The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing. We recommend that you speak to a qualified financial planner for advice tailored to your individual circumstances and goals.
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