Don’t Panic: Market Volatility Is Normal — Stay the Course

Today’s headlines may feel unsettling. News of Donald Trump’s tariff war causing sharp drops in global financial markets, and individuals like Michael Stansfield seeing pension values fall by over £120,000, naturally stirs anxiety.

But before reacting emotionally to market volatility, it’s crucial to pause, gain perspective, and return to sound principles.

Market Drops Are Normal — and Temporary

Markets move in cycles. Sharp declines like the one we’ve seen recently are not new.

Whether triggered by trade wars, pandemics, or political uncertainty, downturns are an inevitable part of investing. Historically, every dip has been followed by recovery — and often growth that more than makes up for previous losses.

Growing wealth can be a difficult process. When markets are down, like 2022, it can feel like markets become obstacles that are making your goals out of reach. History shows that panic selling can create obstacles an investor cannot overcome. At the same time, markets can help you meet your goals and beyond (even through inevitable downturns).

Check out this great video from Vanguard showing how detrimental panic selling can be to wealth:

Why Panic Selling Hurts More Than It Helps

Emotional decisions—especially panic selling during a downturn—can be financially devastating. Investors who sell when the market drops often miss out on the rebound. The best days in the market often come shortly after the worst. Missing them can significantly damage your long-term returns.

As one of the readers in today’s Telegraph Money article rightly said:

“We’ve all been here before. Every time the market comes back.”

And it will.

The "Wall of Worry" chart visualises the remarkable growth of world equity markets from September 1994 to August 2024, despite a constant stream of negative global events. Each event—ranging from economic crises and health pandemics to political upheavals and environmental disasters—is marked along the timeline to demonstrate that markets have historically climbed in the face of uncertainty. Notably, a $1 investment in the MSCI World Index in September 1994 would have grown to $5.69 by August 2024, reflecting an average annual return of 6.0% (or 7.8% with dividends reinvested). The chart underscores the resilience of long-term investing, illustrating that while short-term volatility is inevitable, global markets have consistently trended upward over time.

Our Philosophy: Simple. Low-Cost. Diversified.

At Planning My Life, we follow a proven investment philosophy rooted in simplicity, resilience, and self-reliance:

• Stay invested for the long term. Time in the market beats timing the market.

• Diversify globally. Don’t rely on a single economy or sector.

• Keep costs low. High fees eat into your returns.

• Use auto-rebalancing funds. Let smart design—not stress—manage your portfolio.

• Plan ahead. As retirement approaches, gradually shift part of your portfolio into safer assets like bonds and cash to cushion short-term shocks.

For Those Close to Retirement

If you’re approaching retirement, this moment can feel particularly unnerving. But again, the solution is not to panic. Instead, reassess your time horizon. If you’re retiring in stages, or using drawdown strategies, you still have many years of investment growth ahead. Planning your income strategy with some buffer—such as holding a few years of expenses in cash or low-risk assets—can help you ride out any turbulence.

The Best Response? Do Nothing (For Now)

If your portfolio is already well-diversified and aligned with your goals, the most effective strategy right now may be to do nothing. Let the markets do what they’ve always done—recover over time. And if you’re not sure whether your current setup aligns with these principles, consider reviewing your investment plan—not reacting to the headlines.

In Summary

Global markets may be down, but your financial future doesn’t have to be. With a calm head, a long-term plan, and a resilient portfolio, you can weather storms like this—and come out stronger on the other side.

Remember: The secret to successful investing isn’t predicting the future. It’s preparing for it.