Worried about stock market volatility? Here are three reasons why you shouldn’t be

As experienced investors will know, volatility is part and parcel of the stock market.

Values can fluctuate not just daily, but minute-by-minute. Take a look at the London Stock Exchange’s (LSE) FTSE 100 index, and you’ll see share prices rise and fall constantly.

That said, it’s still natural to worry when the markets experience a significant downswing. You might be concerned about what ongoing market volatility means for your investments and finances.

But falling share prices in the short term don’t necessarily mean lower long-term returns because history shows these downswings are typically short-lived.

Keep reading to discover three reasons why the current volatility might not be as concerning as you think.

1. History suggests that the markets will bounce back

Since the FTSE 100 – an index of the 100 largest companies listed on the LSE – was created in 1984, values have fallen and recovered time and time again.

Even the most significant downswings have proven temporary. Take the Covid-19 pandemic as an example. The FTSE 100 fell by 34.93% in only three months but recovered to pre-pandemic levels in just over two years.

Prior to the most recent volatility, the FTSE 100 was continuing to reach record highs and exceeded 10,000 for the first time at the start of 2026.

Whilst historic trends are not a guarantee of future performance, the past 42 years of index data suggest that values will ultimately recover to previous levels – it’s simply a matter of when. As such, those who stay invested for the long term could see their shares recover and continue growing to deliver a positive return.

By contrast, those who opt to sell during a downswing will lose out on the chance of future recovery.

2. Values are only important when you sell

If you’re worried about the markets dropping, it might be helpful to remember that values are generally only relevant if you’re planning to sell soon.

As described above, the markets typically recover over time. So, if you invest for the long term, current share values are unlikely to be representative of how much you’ll get when you eventually exit the market.

Crucially, when the markets drop, some investors may panic and rush to “cut their losses” by selling. However, it’s important to note that this means locking in the current, lower values and missing out on the chance of future recovery.

Of course, volatility can lead to slower growth. As of 26^th March 2026, the FTSE 100 has lost the majority of the gains achieved since the start of the year. But, as mentioned, volatility is to be expected.

So, whilst the current downswing may result in slower growth, it may still be within the realms of expected volatility when investing for several years – meaning you may still achieve your projected returns further down the line.

3. Values may still be higher than when you originally invested

In some cases, you may have already been planning to exit the market around this time. For example, if you first invested in 2016 with the intention of selling after 10 years, the current volatility could mean exiting during a downswing.

However, if you have been invested for a prolonged period, selling now won’t necessarily mean making a loss.

As of 26^th March 2026, the FTSE 100 sits at around the same level as on 2^nd January 2026. So, whilst exiting the market during a downswing might seem counterintuitive, you might achieve the same returns as if you’d sold just two months ago.

Indeed, an investor in the FTSE 100 coming to the end of a 10-year investment on 26^th March 2026 would still have seen the index rise by over 3,800 points (61.74%).

Of course, if you don’t need to sell your shares right now, you could choose to stay invested in the hope of benefiting from future recovery, as described above. However, you might need access to the wealth imminently to fund your retirement or achieve other time-sensitive goals. In this case, it might be reassuring to focus more on the growth achieved over the duration of your investment, rather than on recent volatility.

Chasing “quick wins” can be a risky strategy

All this said, those who commit to long-term investments may not need to worry about the current downswing. Whether you’re at the start of a prolonged investment period or coming to the end of your time in the market, you may still achieve a positive return overall.

Ultimately, those most likely to lose out are investors operating a “quick wins” strategy, holding shares for a shorter period in the hope of generating positive returns overnight.

For example, you might be likely to lock in a loss if you bought shares when values were high earlier this year and sold them once the markets started to drop. Often, all this achieves is guaranteeing a loss.

As history suggests, staying the course and remaining invested for the long term is more likely to see the value of your investments recover and even exceed previous highs.

As such, it’s important to remain calm when faced with volatility. Panicking and exiting the market could see you lock in a loss and miss out on future growth. To avoid making impulsive decisions in a panic, it might be worth speaking with a Financial Planner for guidance.

Find out more about our investment planning and support services.

Get in touch

If you’re concerned about the ongoing market volatility and what it could mean for your investments, our Financial Planners can help you review your strategy and portfolio.

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

Please note

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