How to build a resilient investment portfolio in volatile times

The current economic landscape can present both opportunities and uncertainties for investors. However, you can combat uncertainty with resilience.

And, just as having resilience in life allows us to bounce back from adversity, in the realm of financial planning, it’s about building an investment strategy that can weather market storms and continue to grow over the long term.

Here, let’s discuss the key principles of building a resilient portfolio so that you can rest easy during volatile markets.

Building a diverse portfolio is the core for sustained long-term growth

Markets have been challenging lately; there’s no doubt about that. However, a resilient portfolio often houses a diverse core. This can help maintain balance, even in volatile times. If one area experiences a loss or slow growth, other areas of your portfolio might be able to counter it, leading to an overall average in terms of performance.

A diversified portfolio might include:

• A diverse range of asset classes, including stocks, bonds, and alternative investments
• Investments across different regions and geographies
• Interests in different industries and sectors
• A balance of growth and value as an investment style.

Identifying areas where you can diversify can help mitigate financial risks and make your portfolio more resilient in the long term.

Manage inflation risks by exploring alternative asset classes

Inflation can erode the real value of your investment returns over time. To build a resilient portfolio, consider incorporating assets that have the potential to mitigate inflation risk.

Many alternative assets could include:

• Infrastructure. Investments in essential services such as transportation, energy, and communication networks are often closely linked to inflation or have the ability to adjust in response to rising costs.
• Gold. Often considered a “safe haven asset”, gold has historically performed well during periods of high inflation or economic uncertainty.
• Property. Physical properties, particularly those generating a rental income, can act as a hedge against inflation. As the cost of living increases, rental rates tend to follow suit.
• Commodities. Raw materials, such as oil and natural gas, metals, and agricultural products, tend to see price increases as inflation rises due to higher demand and production costs.

Additionally, during periods when inflation can negatively affect stock and bond returns, the above could hold their value or even appreciate.

However, it’s essential to understand the specific characteristics and risks associated with each asset class before incorporating them into your investment strategy. Talk to a professional for a personalised illustration of your options.

Take advantage of compounding to support long-term growth

Compounding is the process where the earnings on an investment, whether from interest or capital gains, are reinvested to generate additional earnings over time.

Think of this as earning interest on your initial investment and on the accumulated interest. This snowball effect can significantly accelerate the growth of your wealth over the long run.

Here, time is a crucial part of the compounding process.

Imagine you’re investing £10,000. A longer investment time frame typically allows more time for any returns to compound. If you were to withdraw your money as a result of market noise and panic, you could miss out on potential growth.

Consider the below as an example of how your returns could change based on the time you remain invested. Here, assume you made a £400 monthly contribution on top of your initial £10,000 and opted for a medium level of risk.

Source: HSBC

If, after 10 years, you were to withdraw your funds following a bout of poor performance, you could miss out on substantial growth over the long term.

Tune out the noise and stick to the beaten path

While the news and opinions of well-meaning friends and family can sometimes offer a different perspective, it’s crucial to remember that they should support, not dictate, your investment decisions.

Here, staying the course laid out by your Financial Planner could be more helpful. Remember, they possess the expertise to make informed decisions and possess a deep understanding of your financial situation.

More often than not, during periods of market volatility, your Planner’s guidance will be to remain invested and allow time for the market to recover. After all, history has demonstrated that attempting to time the market is notoriously difficult.

Missing even a few of the market’s best-performing days could significantly reduce your potential for long-term returns. Morningstar reports that after the S&P 500 fell by 6% on 4 April 2025, it bounced by 9.5% on 9 April 2025.

Market downturns, while unsettling, are a natural part of the economic cycle and often present opportunities for future growth.

Building a resilient financial future requires a disciplined approach and a focus on your long-term objectives, rather than reacting to short-term market noise.

Here, seeking professional advice to help navigate these complexities and build a robust investment strategy could be invaluable.

Get in touch

If you’re new to PenLife, we invite you to get in touch to find out how we could help you build a resilient portfolio geared to help you achieve your long-term goals.

If you’re an existing client, we look forward to discussing your current portfolio at your annual review. In the meantime, if your circumstances change, please get in touch.

Email us at enquiries@pen-life.co.uk, or call 01904 661140 to find out more about how we can help.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

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

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