4 reasons to remain calm amid market volatility and uncertainty

Geopolitical tensions have led to a bumpy start to 2025 for investors.If you’re worried about volatility and what it might mean for your long-termfinances, there are reasons to remain calm despite the uncertainty.

The ongoing war in Ukraine has resulted in some anxiety in Europe,with the UK and other countries committing to increasing defence spending. Inaddition, the new Trump administration in the US has imposed several tradetariffs on partners and suggested more will follow.

As a result, many companies and sectors have seen share prices riseand fall more sharply than usual.

Indeed, according to the Guardian, the euro STOXXequity volatility index, which tracks market expectations of short- andlong-term volatility, reached a seven-month high at the start of March 2025.The index has almost doubled since mid-December 2024, suggesting investors arefeeling nervous.

As an investor, these external factors are likely to have affected thevalue of your investments over the last few months.

Investment markets don’t like uncertainty

Uncertainty is one of the key factors that contributes to volatilityin investment markets.

Unknown policies or other events can make it difficult to understandhow a company will perform financially over the long term. This uncertainty canaffect the emotions of investors, who may be more likely to make knee-jerkdecisions as a result.

Imagine you hold investments in an electronic goods company based inChina. In the news, you read the US will impose a 10% tariff on all Chinesegoods. As a major export market, this decision by the US could significantlyaffect the profitability of the company.

After hearing the news, you might worry about your finances andwhether you should still invest in the company. If enough investors act onthese concerns, it may result in the value of the shares in the company falling.

With so much global uncertainty at the moment, your investments andthe wider market could experience more volatility than usual in the comingmonths.

Level-headed investors could improve investment outcomes over the longterm

While it may be difficult, remaining level-headed during times of uncertainty could make financial sense. Here are four reasons to remain calm.

1. Periods of volatility have happened before

When markets are volatile, it may feel unusual or unexpected. However,market volatility is a normal part of investing.

While investment returns cannot be guaranteed, historically, marketshave delivered returns over a long-term time frame. Even after downturns,markets have bounced back.

Remembering this could help put your mind at ease and allow you to focus on the bigger picture rather than short-term market movements.

2. Diversified investments could smooth out volatility

Newspaper headlines are designed to grab your attention, and they’re likely to focus on the parts of the market that are experiencing the greatest volatility. For example, you might read that “technology stocks have plunged10%” or “markets in Japan are booming”.

While these headlines aren’t inaccurate, they don’t tell you the wholestory.

In reality, a balanced investment portfolio will typically includeinvestments across a range of assets, sectors and geographical locations.

So, while a fall in technology stocks might affect you, it may not have as large of an effect as you expect if you only read the headlines. Gains or stability in other areas of your investment portfolio could balance out the dip.

3. Market volatility may present an opportunity to buy low

If you’d previously planned to invest a lump sum or you invest regularly, market volatility may cause you to rethink. However, halting your investments might mean you miss an opportunity.

When markets fall, you might have a chance to invest when the price of stocks and shares is lower, allowing you to buy more units for your money. Over the long term, this could lead to better yields.

While investing during a low period could result in higher returns over the long term, you should ensure investments are appropriate. You may want to consider your financial risk profile and wider circumstances when deciding how to invest your money.

4. Trying to time the market can prove costly

Finally, if you’re focused on what the market is doing today, it can become tempting to try and time the market – to buy low and sell high.

However, with so many external factors affecting markets, it’simpossible to consistently time it right. Even professionals, who have a teamand resources, don’t always get it right.

Rather than trying to time the market, remaining calm and sticking toyour long-term investment strategy is often a better course of action.

Contact us to talk about your investments

If you have any questions about how your investments are performing orwould like to review your investment strategy, please get in touch. We’re hereto answer your questions and help you feel confident about your financialfuture.

Please note: This blog isfor general information only and does not constitute financial advice, whichshould be based on your individual circumstances. The information is aimed atretail clients only.

The value of your investments (and any income from them) can go downas well as up and you may not get back the full amount you invested. Pastperformance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fitin with your overall attitude to risk and financial circumstances.

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