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When the headlines get loud and the portfolio balance drops, the instinct is to do something… anything. Sell, switch to cash, wait it out on the sidelines? With the recent conflict in Iran adding to an already uncertain backdrop, that instinct is back.
But history keeps delivering the same lesson. Markets react sharply, then recover far faster than most investors expect, often before the news cycle has even moved on. International shares rebounded within months of the COVID-19 sell-off in 2020, and again after US tariffs on Liberation Day in 2025. The investors who did best in both episodes had one thing in common: they didn't try to outguess the market. They stuck to a plan built for exactly this.
One of the biggest mistakes people make during uncertain periods is treating short-term movement as if it defines the whole investment journey. A portfolio that rises and falls from month to month is not necessarily failing. In many cases, that movement is the price of pursuing long-term growth. The real test is whether your investments still match your goals, your time frame, and your comfort with risk.
That is why a clear plan matters. Before markets become choppy, it helps to know what each part of your money is supposed to do. Some money may be for near-term spending, some for emergencies, and some for long-term growth. When those purposes are mixed together, a market fall can lead to emotional decisions. When they are separated properly, it becomes much easier to stay calm and avoid unnecessary changes.
Cash reserves are an important part of that structure. Having money set aside for short-term needs means you are less likely to sell investments at the wrong time. Cash may not deliver exciting returns, but it provides flexibility and peace of mind. For many investors, that buffer is what makes it possible to stay invested through difficult periods.
It is also useful to think carefully about time frame. Money you may need in the next year or two should generally be treated differently from money intended for retirement or other long-term goals. The shorter the time horizon, the less room there is for market recovery if values fall. Longer-term money, by contrast, usually has more capacity to ride out volatility. Matching the investment strategy to the goal is one of the most effective ways to reduce stress.
Another valuable habit is to review rather than react. A market downturn is a good time to check whether your portfolio still reflects your objectives and risk tolerance. It is not automatically a signal to move everything into cash or change course completely. In fact, some investors benefit from rebalancing during these periods, which helps restore the original mix of growth and defensive assets. That keeps the portfolio aligned and reinforces disciplined decision-making.
Staying steady also means keeping contributions going where possible. Investing regularly can help smooth out the effects of market ups and downs over time. Instead of trying to guess the best moment to buy, a consistent approach spreads risk across different market conditions. That discipline can be more powerful than trying to time the market perfectly, which is difficult even for experienced investors.
Volatile markets are also a reminder to look beyond investments alone. Financial resilience depends on more than portfolio performance. Insurance, debt management, emergency savings, and estate planning all play a role in protecting a household's broader financial position. When those pieces are in place, it becomes easier to stay focused on long-term goals rather than feeling pressured by every market headline.
Perhaps the most important point is this: volatility should not automatically change a good plan. If your circumstances have not changed, then a short-term market swing usually should not force a major shift in strategy. Markets will always move through cycles, while a well-structured financial plan is designed to remain steady, adapt when necessary, and keep working over the long term.
The playbook is simple:
Review the plan
Maintain your buffers
Keep investing regularly
Avoid emotional decisions
That kind of discipline is not flashy, but it is often what makes long-term success possible.
Volatility is a feature of investing, not a fault. But staying steady through it is easier with someone in your corner.
Findex Wealth Management advisors can stress-test your cash buffers, review your plan, and make sure your strategy still fits your goals.
Disclaimer:
Findex NZ Limited trading as Findex.
The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex.
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For over a decade, Craig has been providing comprehensive investment and financial advice to clients throughout New Zealand. Since joining Findex in 2017, he has built a strong reputation as a trusted advisor who takes a holistic approach to financial planning.
As the Adviser Representative on the Findex New Zealand Investment Committee, Craig ensures client interests are at the forefront of all decisions. He is committed to creating well-rounded financial strategies that align with each client's financial and lifestyle goals, helping them make the most of their money and achieve long-term success.
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