Why volatility is good for investors

What is volatility?

When you first start investing, the ups and downs of the market or volatility may seem worrying. But it can actually be a good thing. By embracing these swings, you can take advantage of buying opportunities. And with the right approach, like regular investing, it could work in your favour.

Why should I embrace volatility?

Buying opportunities: When markets dip, it could be a good time to buy quality investments at lower prices. Buying during downturns could put you in a stronger position if prices rise again.

Market recovery: History shows that markets tend to recover and grow over time. Staying invested for the longer term can help ride out the highs and lows. This approach could help with longer-term gains.

Learning and growth: Experiencing market volatility helps you understand how different factors affect the market. Over time, this can help build and sharpen your investment strategy.

Rebalancing opportunities: Market changes provide opportunities to rebalance your portfolio. Regularly reviewing and adjusting helps you stay aligned with your goals and risk tolerance.

The power of regular investing

Regular investing, often called pound-cost averaging, is one way to help smooth out the bumps in the market. Instead of trying to time your investments, you simply invest a set amount at regular intervals, such as every month or every quarter.

You buy more when prices are low and fewer when they’re high, but it evens out over time.

Benefits

  • Market timing risk - regular investing lets you skip the stress and invest consistently, no matter what's happening in the market.
  • Discipline - by setting up automatic contributions, you make sure you're always investing towards your financial goals.
  • Advantage of compounding - your investment earnings can generate even more earnings over time. It can give small contributions the potential to become meaningful longer-term growth.
  • Reduces emotional investing - regular investing helps you stay cool and collected during market volatility. This means you are more likely to stick to your plan and achieve your goals. 

How do I get started?

When setting up or reviewing your investment plan, follow these steps:

  • Pick an amount – start small if you like. Even £50 a month can make a difference.
  • Choose your investments – funds, ETFs, or shares — a diversified mix can help balance risk and reward.
  • Automate it – set up a direct debit so your investments happen without you needing to think about it.
  • Review regularly – life changes, and so might your goals. Check in on your investments at least once a year to make sure they’re still working for you.

Ready to make volatility work for you?

Please remember that the value of investments and the income from them can fall as well as rise, and you may get back less than you invest. If you’re not sure about investing, seek financial advice. There will normally be a charge for that advice.

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