In late February, Russian President, Vladimir Putin, ordered a military invasion of Ukraine – long-held tension finally breaking through as a war that people feared for years had finally begun. And with global instability comes market volatility.
This does not constitute advice and advice should be sought in all instances before acting on it.
Despite feeling inevitable to some, most countries across the globe were shocked by Russia’s aggression and the world has begun to respond – in sanctions and support, as well as in the financial markets.
Keep calm and carry on
Some people might spook easily and worry about their investments – and we’ve had many clients turning to us for advice. But if you are a long-term investor, the best thing to do is to keep calm and carry on. Historically, the stock market doesn’t tend to stay in flux long after international turmoil and recovers quickly, so it’s always best to wait.
Just think about it: how much will your returns actually be if you were to sell in a falling market? The conflict is in the early days and no one knows what the invasion will ultimately mean.
We are already seeing an effect on energy prices, but will it impact monetary policy in the near future?
Play the long game
Resist the urge to go with your knee-jerk reaction of selling your investments when things take a turn for the worse. Of course, nobody wants to lose money, so we’ll take steps to mitigate any loss, but selling might actually mean you lose more money and sooner than you expected. It might seem natural to want to buy when the market is low and sell when it’s high, but it’s difficult to predict when those peaks and valleys will be reached. Panic-selling, selling when the market is low, is the opposite of this time-tested strategy, so just remember to keep watch of the market’s performance and act accordingly.
It’s often more of a battle of emotions when it comes to resisting acting during market volatility. Nothing can be done about it, but you can control your reaction. Two of the most effective long-term investment strategies are to invest for the long-term and maintain realistic expectations for performance and returns, in addition to a diversified portfolio, which helps you avoid underperformance in one area of your investments.
Stay the course
It’s important to regularly check in on your investments but keep your eye on the prize. Focus on your long-term investments and don’t let short-term volatility change the way you invest. Time is on your side when it comes to the stock market.
To discuss how your personal or business finances might be affected by the geopolitical climate, get in touch with the experts at Dental & Medical Financial Services. We’ll help you ensure your financial plan can withstand any hardship and that you won’t be prevented from reaching your goals.