How you can feel more confident about your finances in the face of market volatility
During periods of volatility, making investment decisions based on short-term movements or emotional, knee-jerk reactions can often do more harm than good.
Castlefield Adviser Pooja Shah outlines how you can feel more confident about your financial future.
While the fluctuations we see in the financial markets may understandably cause some investors to feel nervous, short-term market dips caused by global events are part and parcel of investing. For those people who may be new to investment, making decisions based on short-term market movements or emotional, knee-jerk reactions can often do more harm than good.
In this blog, I'll cover responses to some of the common questions and concerns I am regularly asked by clients who are new to investing, and I'll explain a few steps for how you can feel more confident about your financial future – despite market volatility.
The market has been quite volatile lately. Should I pull my money out and wait for things to settle?
A: It’s understandable how unsettling volatility can make you feel. However, trying to time the market is often more damaging than riding out the waves. Historically, markets have recovered from downturns, and staying invested through the cycle has been shown to yield better long-term results than jumping in and out.
My portfolio has dropped in value. Did I make a mistake in my investment choices?
A: A drop in portfolio value doesn’t mean you made a bad decision - it often just reflects short-term market movements. If your investments were chosen based on your goals, risk tolerance, and time horizon, you’re likely to still be on the right track. However, it’s important to review your plan periodically to ensure it still aligns with your needs.
Should I stop contributing to my investments until the market improves?
A: Not necessarily. When the market is down, you're essentially buying investments at a discount. This can actually enhance long-term returns, especially in pensions, where tax relief is added. Continuing your regular contributions, lets you benefit from “pound-cost averaging”. When asset prices dip, your fixed regular contribution buys more units, essentially lowering the average price paid over the term of the investment, and has the effect of reducing the impact of market volatility.
What if this time really is different? The news makes everything sound so dire.
A: Every market downturn feels unique, and the media often emphasises worst-case scenarios. While it's important to be informed, reacting emotionally to the latest headline in the news can be costly. We encourage clients to focus on their long-term plan, which is built with risk in mind. We can make adjustments based on your comfort level—but would strongly advise against making any panic-based decisions.
Reacting emotionally to the latest headline in the news can be costly
How can I feel more confident about my financial future right now?
A: Confidence comes from clarity and planning. We’ll revisit your goals, update your financial plan, and ensure your investments reflect your current needs and risk tolerance. A solid, personalised strategy is your best defence against uncertainty.
With retirement typically lasting 20–30 years, even modest rates of inflation can significantly erode the value of retirement income.
Also, I always like asking my clients, if they did not invest their money what else would they plan to do with it? Savings up to a certain limit play an important role in any financial plan. But the impact of inflation is very important to understand. According to the author Sam Ewing: ‘Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair’. Using a less colourful definition, inflation is the rate of increase in prices over a given period of time. With retirement typically lasting 20–30 years, even modest rates of inflation can significantly erode the value of retirement income. The charts below plot average inflation rates of 2%, 4% and 6% over a 35-year period, which would take a 65-year old to 100. The charts also show the survival rate at different points using average mortality for a 65-year old followed by a range of probabilities.
Source: Office for National Statistics licensed under the Open Government Licence v.3.0
Source: Office for National Statistics licensed under the Open Government Licence v.3.0
In a nutshell, the charts above show how little £10,000 will be worth in 35 years’ time from today. As life expectancy increases, even modest levels of inflation can have a significant impact on income in retirement.
If you'd like to talk through any part of your current plans for navigating high-inflation, or would like to explore alternative options for your finances, please get in touch.
Written by Pooja Shah
This article is intended for information purposes only and it does not constitute a personal recommendation or inducement to invest. It is based on information obtained from sources which we believe to be accurate but the accuracy of which we cannot warrant and may be subject to change at short notice, therefore we cannot be held responsible for the implications of relying on this information. The contents of this document are not intended to be construed as legal, accounting, tax or investment advice. With any investment your capital is at risk. You should seek independent financial advice if you are unsure whether an investment product is suitable for your personal financial circumstances and appetite for risk. Unless otherwise stated this information is accurate as at 21/07/2025.