What to do when volatility strikes
Volatility describes periods of unpredictable, and sometimes sharp, market rises and falls. It's natural, but unnerving. Let us guide you.
Important information - the value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon.
Tom Stevenson, Investment Director
Whatever you do, don't panic
Stock markets rise and fall for all sorts of reasons - interest rate hikes, geopolitical changes, company announcements... the list goes on. And while these movements might make you feel uncomfortable, they're part and parcel of investing.
Here are some things to think about if events outside of your control are making you question your investing decisions.
Review your investment strategy
Has it changed? Or has the world around you? If your strategy is still in line with your goals and objectives - think about sticking with it.
Avoid making rash decisions
Acting in the moment could lock in any losses and impact any potential future gains.
Take the right risks
If increased volatility makes you unduly stressed, make sure you're still happy with the level of risk you're taking.
Check if your portfolio's well balanced
Having a mix of investments (diversifying your portfolio) can help minimise risk during periods of volatility, as no single asset class performs well all the time and in all economic conditions.
Keep some cash set aside
Make sure you have an emergency fund. This way you won't be forced to sell your investments and it gives them a chance to recover.
Set your sights on the long term
Market falls can signal potential opportunities, as prices dip. Markets can - and have - recovered over time (although there are no guarantees).
Stop looking at your account
We fear losses more than we like gains. You'll thank yourself later by not checking in constantly on the value of your investments.
Seek guidance or advice
Our website has plenty of useful guidance that can help you. If you have a relationship manager or adviser, talk to them for reassurance.
Stock markets have overcome setbacks before
Investing is for the long term. Setbacks happen, but history shows that markets do recover. Here's what happens if you invested £100 each month in the FTSE 100 - and stayed invested - since January 1986.
Source: Bloomberg, 30.10.23 based on the FTSE 100 on a total returns basis with dividends reinvested. Chart does not take account of charges which would reduce the amounts shown.
Five-year performance table
| (%) As at 31 Dec | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
| FTSE 100 | 17.3 | -11.6 | 18.4 | 4.7 | 7.9 |
Past performance is not a reliable indicator of future returns.
Source: Refinitiv, total returns in local currency as at 31.12.23.
Our five guiding investing principles
Make smarter investing decisions
Whether you're new to investing, or have been doing it for a while, our five investing principles will help you make smarter investing decisions. From why it pays to stay invested, to managing risk and how to make your pension last.... we take five core principles and show the positive effect they can have on your investments in real terms, although gains aren't guaranteed.
Read our five principlesPreparing for volatility
A diversified portfolio can potentially help to reduce the effect of volatility. Navigator can present you with multi asset funds to consider based on your inputs, such as, your investment approach, how you'd like your money managed and how you feel about risk. If you'd like a personal financial recommendation, financial advice might be of interest.
Find a diversified fund with Navigator
If you're not sure what to invest in, Navigator helps you find a multi asset fund.
Personal financial advice
Talk to one of our financial advisers about how a personal recommendation can give you peace of mind - especially when times are unsettled.
Important information - please note that Navigator is not a personal recommendation in respect of a particular investment. If you need additional help, please speak to an authorised financial adviser. You should regularly reassess the suitability of your investments to ensure they continue to meet your attitude to risk and investment goals.
How volatility can be your best friend
As uncomfortable and as unwelcome as volatility is, it is survivable and, even more importantly, it can provide good opportunities.
In this article Emma-Lou Montgomery gives us ten important lessons on how to manage volatility.
Why volatility can be your best friendAsk our experts a question
Each month we'll pick up on your most popular questions and answer them. We're keen to hear about what matters to you, so do drop our experts a line.
Understanding market volatility
It can be worrying when stock markets go down. Our guide will help explain what to do - and what not to do - during times of uncertainty.
Managing investments in uncertain times
What volatility is, and how to deal with it.
Latest news
When will interest rates fall?
UK inflation falls to 3.2%
Nafeesa Zaman
Fidelity International
17 April 2024
Markets react to Middle East fears
Tom and Ed explore the temperature of markets
Ed Monk
Fidelity International
17 April 2024
This week in the markets: investors stay calm despite rising tension
What’s driving your investments this week?
Tom Stevenson
Fidelity International
15 April 2024
