Unexpected changes in the market can cause price fluctuations and is a completely normal part of investing. We sometimes call this “Market Volatility”.

Market volatility can be caused by:

  • interest rates
  • inflation
  • economic outlook
  • policy changes
  • consumer confidence.

Important:

The value of your investment can go down as well as up so you may get back less than you originally invested.

It’s important to invest for at least 6 years to help ride out any changes in the market. That said, you can take out your money at any time.

Note:

This is not intended to promote or provide a recommendation in relation to our investment service. Any comments made are intended to provide general information only. If you would like any further information, please contact a Nationwide Financial Adviser.

Tips for looking after your investments:


Put market changes in perspective

Let's take a look back over the past 2 years. During early 2020 when the pandemic hit, stock markets drastically declined due to uncertainties around the effect of Coronavirus. Over time, the adverse impacts of the pandemic in the market reduced, performance steadily improved, and the market began to recover.

IA Global Sector - total return from 31 March 2015 to 31 March 2021

Looking more recently in January 2022, markets sold off on the back of the prospect of a higher rate environment, particularly in the US. The Russia-Ukraine tensions also put pressure on the equity markets. Changes to the market’s rate hike expectations have caused bond yields to spike. The US Federal Reserve is suggesting a more aggressive tightening of policy (rising interest rates and reducing liquidity given out to markets) in the form of quantitative easing as a response to higher inflation and strong labour markets.

But let’s take a step back and look at the past 6 years to get the whole picture:

IA Global Sector - total return over 6 years (total return does not include the effect of any fees and charges)

Although there have been periods of increasing volatility in the markets (one of which we are currently experiencing), looking at the longer term there has been a strong rise in overall market performance.

Important:

Past performance is not a guide to future performance.


Don’t try to time the market

No one can predict what the markets will do next.

Selling your investments when prices have fallen could result in a permanent loss. Fund managers work hard to exploit these downturns in the market. Their aim is to ensure your investment makes the most of any opportunities during uncertainty.


Think about regular investments

By investing on a regular basis, you'll buy assets at a different price each time you invest.

This can help smooth out the impact of the highs and lows of market changes. Regular payments into your investment may help increase the chance of purchasing assets at a low price.


Consider phasing any withdrawals you need to make

If you know you’ll need access to your money in the next 6 months, taking it out gradually may help.

When the market is volatile, phasing withdrawals may help:

  • Reduce financial loss, as investment values may be changing quickly.
  • Minimise inconvenience if a fund suspends trading, meaning you temporarily cannot access your money.

Fund suspensions

In a volatile market, a fund may temporarily suspend trading. It allows funds to dispose of assets in an orderly way, protecting remaining investors in the fund. This is quite common in property funds, where the underlying assets aren’t easily tradeable and take time to dispose of.

If a fund you've invested in gets suspended, it may take longer than usual to make withdrawals from the fund.


Diversify your portfolio

A well-constructed, diverse investment portfolio can help minimise investment volatility.

You can diversify your portfolio by:

  • investing with different assets and fund managers
  • investing in a multi-asset fund. Our Primary Fund range, provided by Aegon, invest in a range of assets, across a range of geographical regions.

Make sure your investment plan is up to date

If your investment plan suits your current needs, it may help you ride out any changes in the market.

It's important to:

  • regularly review your investment portfolio, and
  • change any parts of your investment plan that no longer suit your needs.

For example, when markets are volatile, you may review your attitude to risk or any planned purchases.

Your investment plan should be in line with your:

  • attitude to risk
  • ability to absorb loss
  • need for accessibility
  • time horizon
  • investment goals.

Request investment advice

Call or complete the online form to book a video or phone appointment with one of our Financial Advisers.

Online

Use the online booking form to request investment advice.

Over the phone

Our UK-based team can help you request investment advice.

Call us Monday to Friday, 9am to 5.30pm.

Closed Saturday, Sunday and bank holidays.



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