If you’re an investor, you’ll probably be very familiar with the impact of President Trump’s ‘Liberation Day’ tariffs. In the days after the tariffs were unveiled on Wednesday 2 April, markets around the world reacted negatively, with some experiencing significant downturns.
This means the markets are likely to remain volatile in the coming weeks, which in turn, may mean you’re now wondering what it might mean for your investments? Furthermore, you may be thinking about the actions you might want to take to help your money survive an uncertain stock market.
If you are, read on to discover three powerful steps that could help your investments to weather the stock market storm, and potentially boost their long-term growth. Before you do though, let’s look at why investing might still be a shrewd financial strategy.
Investing may offer greater long-term growth potential
Historically, the stock exchange has tended to provide greater growth potential than cash savings over the long-term.
To demonstrate this, you might want to consider the following graph, which tracks the performance of a medium risk 60:40 multi-asset investment portfolio between 1 January 2005 and 31 January 2025. It also reveals the performance of cash savings during the same period.
Data sourced from Morningstar by AFH Wealth Management. The 60:40 portfolio allocates 60% to MSCI All Country World Index (ACWI) and 40% to Bloomberg Global Aggregate.
As you can see, the investment portfolio provided significantly greater returns than cash. Always remember that previous performance is no guarantee of future performance and that the value of investments can go down as well as up.
In fact, short-term downturns and market volatility should be expected when investing, however the good news is that as an investor you can take steps to reduce the potential impacts of them when they happen. Let’s consider three of them.
1. Focus on the long-term
When the markets suffer a downturn, it can be unnerving. However more often than not, the best way to deal with it is to remain calm and focus on your long-term goals.
This can help to reduce the temptation to sell your investments in an attempt to avoid losses, as doing so usually turns a ‘paper loss’ into an actual one. Furthermore, it deprives your money of the opportunity to recover in the likelihood that the markets recover.
The desire to dispose of your investments can become greater when other investors seem to be selling their shares. While it may feel like these other investors are being shrewd with their money, it’s worth remembering that more often than not, they regret their decision when the stock market later recovers.
2. Use diversification
Spreading your investments over different industries and regions could help to reduce the effects of a stock market downturn. To demonstrate this, you might want to cast your mind back to the last time the stock market suffered a major downturn: the Covid pandemic.
At the time, travel companies suffered significant losses because would-be travellers were having to adhere to lockdown rules. This means that if you held shares in the companies during the pandemic, you would probably have seen the value of your investments plummet.
However many tech companies saw profits rise during the Covid outbreak, as people around the globe worked from home and used technology to stay in touch with loved ones. If you had have held investments in these companies as well as travel companies, the strong performance of the latter could have helped to counter (or even negate) the poor performance of the former.
3. Block out the ‘background noise’
With so much being reported in the media and social media about the impact of the tariffs on the stock market, it’s easy to feel overwhelmed. Treating the news and social media posts as ‘background noise’ and blocking it out could help you to pay less attention to what’s being said.
This could help to reduce the anxiety you may feel about your investment’s performance, which in turn, could help you to avoid a knee-jerk decision to sell your investments to limit potential losses – a decision you could later regret.
We’re here to help
While we hope this blog is useful, it’s not intended to be advice. If you are feeling anxious about the volatile stock market, speaking to a financial adviser could help. They can explain what’s happening with the markets using clear and easy to understand language, which could help put your mind at rest.
Additionally, they could also help you to understand what your options might be, and which could be best for you. If you have investments and would like to discuss the potential impact of the Liberation Day tariffs on your portfolio, and the actions you may need to consider, please contact us on 0333 010 0008. We would be happy to arrange no obligation meeting with one of our advisers.
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- The difference between savings and investments?
- What is a portfolio and how is it managed?
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- What are ‘Bull’, ‘Bear’ and ‘Stag’ in investing?
- Is crypto an investment you might want to consider?
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Friday 11 April 2025