How to get your investment portfolio ready for erratic times

Although you cannot forecast when volatility will affect your investment portfolio, you can be ready for it

Although investing can be unpredictable, one thing is certain: your investment portfolio will experience volatility.

This holds true whether you invest in individual stocks or funds, and regardless of your level of experience.

Asset prices have fluctuated sharply in recent weeks due to stock market volatility brought on by the Iranian conflict.

BFIA problems nowadays. For instance, the FTSE 100, the primary UK index, dropped by 9.3% between February 28 and March 23, when the US-Israel war on Iran began. Although it has since gained ground, as of April 14, it was still down nearly 3% since the conflict began.

The primary US stock market, the SandP 500, has fluctuated since the beginning of the year. On March 30, it fell 200 points as fighting in Iran escalated, but it quickly recovered amid shaky peace negotiations.

Asset manager Sarasin & Partners' chief market strategist, Guy Monson, stated: "Wars are inherently unpredictable. Hot wars, like the one with Iran, cannot be easily managed or resolved by Washington alone, in contrast to recent trade disputes where damage is readily reversible. As we will see in the coming weeks, the US, Israel, Iran, Gulf states, and outside powers all have different, sometimes conflicting, goals.

It is important to consider this when interpreting the announcement of a two-week ceasefire. Rather than a resolution, it signifies a pause in escalation. Ongoing tensions, especially in Lebanon, show how brittle this pause may prove to be, even though it lessens the immediate risk of direct confrontation.

As a result, investors must maintain their composure while remaining adaptable, concentrating more on the structural factors that will influence markets in the coming months rather than the commotion of everyday events. The "

Here are some ways to at least get your investment portfolio ready for volatile times, even though you might not be able to predict when they will occur.

Ignore the commotion.

Since investing is a long-term endeavor, some volatility in the stock market over a few decades shouldn't be too detrimental as long as your portfolio matches your risk tolerance and financial plan.

When stock markets are declining, some pundits even advise against checking your investments because selling at a loss could result in missing out on a significant rally.

According to James Norton, head of retirement and investments at Vanguard Europe, "market turbulence can be unsettling, but it's important to remember it's a natural part of investing and that every long-term investor is likely to experience many dips in their investing lifetime."

It's not about timing the market; it's about time in the market. The best and worst trading days have historically tended to coincide, frequently during times of increased market uncertainty, making it nearly impossible to time the market successfully. The "

Using an example from 2025, an investor would have reduced their returns from 14.4 percent to 4.8 percent on a 10,000 portfolio by almost 1,000 if they had sold their investments and moved to cash on April 8, 2025, in response to tariff-induced volatility at the time, and then re-entered the market a month later on May 12, 2025, according to Vanguard calculations.

The MSCI World Index has experienced eight bear markets since 1972, so you're more likely to see your money grow over time if you stay invested and concentrate on the long term, even if there are some difficult times along the way. Every time, it has grown and recovered.

Keep your diversity.

The adage "don't put all your eggs in one basket" is among the oldest when it comes to investments. To weather turbulent times, diversification is essential.

You can make sure that if certain components of your portfolio are declining, other uncorrelated components can make up the difference by spreading your money among a variety of stocks and using other assets like bonds.

Norton stated: "Blending stocks and bonds according to your goals and risk tolerance is one way to protect your portfolio.

"In the past, bonds have aided in portfolio stabilization during stock market declines. You can profit from investments that might perform well when others are declining if you have a wide range of investments across international markets. The "

The start of the Middle East conflict at the end of February, however, sparked concerns about inflation and expectations that interest rates might rise. As a result, the price of UK government bonds fell, though they have since slightly increased.

AJ Bell's head of personal finance, Sarah Coles, stated: "Investors want to buy low and sell high because gilt prices will fluctuate with demand. This carries the investment risk that you could lose money if a bond's value drops before you sell it. The risk profile of cash savings is significantly different. A "

Look for the opportunities.

Uncertainty is often the source of the best investment opportunities, and a decline in the stock market may be a good time to enter the market.

"Dips and dividends were the key trends for AJ Bell DIY investors responding to market volatility driven by the Middle East conflict in the first week of the US-Israel war against Iran," stated Dan Coatsworth, head of markets at AJ Bell. Between March 2 and 6, there were twice as many buy trades as sell trades, suggesting that investors saw a chance to purchase funds or companies at lower prices.

"Some investors may have adopted a longer-term perspective, even though there is still a lot of uncertainty surrounding the conflict and what it might mean for inflation and the direction of interest rates. They may be certain that the crisis will eventually be resolved, opening the door for longer-term earnings growth, but they may also think that near-term earnings could fall short, which is already reflected in lower share prices. The "

It may be possible to find investment-worthy stocks that were down less than the market as a whole during the most recent period of stock market volatility.

"Traditionally, those are the stocks that are often quickest to recover or emerge as new market leaders, or there may be an opportunity to buy that stock you wanted to buy at a particular price, at an even lower price," IG North America CEO JJ Kinahan stated.

In order to reduce the possibility of suffering large losses during these times, it can also be beneficial to invest a modest sum at a lower price. The "

Take what you can control.

Performance and volatility are beyond your control, but the fees associated with investing can actually be one of the biggest dents in your earnings.

It is crucial to shop around because platform, fund, and trading fees can differ between providers.

View our list of the best investment platforms and companies that offer cashback for your pension or ISA.

"Fees reduce the returns on your investments, which is especially unpleasant when stock markets are declining. Even though investing expenses might not seem like much, if you're receiving a 4 percent return and paying 2 percent in fees, that's half of your returns lost," Norton continued.

Therefore, over time, even seemingly insignificant expenses can result in significant losses. A "