Written by David Rosbotham DipPFS | Financial Planner

When markets correct (dip) – especially sharply – it’s natural to feel uneasy. Whether you’re a seasoned investor or just getting started, volatility can trigger the instinct to “do something”. But before you act, it’s important to think about financial planning. Pause, gain perspective, and reflect on a deeper truth:

It’s not about where the market goes next – it’s about how your plan is built to support your life goals, no matter the headlines.

So, What Is the Stock Market?

At its core, the stock market is a marketplace where investors buy and sell ownership shares of companies. When you invest in the stock market, you’re buying a stake in businesses – businesses that create products, generate profits, employ people, and grow over time.

We invest in these companies not because prices go up every day (they don’t), but because over the long run, they tend to grow in value and provide returns that outpace inflation.

What Are Market Corrections and Why Do They Occur?

Corrections – defined as declines of 10% or more from recent highs – are a normal part of the market cycle. Since 1950, the U.S. stock market has seen a correction roughly every 1 to 2 years. They’re not a bug in the system – they’re a feature.

Here’s some perspective:

• Market corrections of 10–15% happen regularly.
• Deeper drawdowns of 20–30% (coined as a ‘bear market’) – while more rare -have also occurred globally, often during recessions or periods of high uncertainty.
• Yet, historically, markets have recovered and gone on to reach new highs over time.

From the dot-com crash, to the Global Financial Crisis, to the COVID-19 pandemic – every major downturn has eventually reversed. The average recovery time from a correction? Just a few months. From a bear market? Around 1–2 years.

What’s the Biggest Mistake Investors Make?

Reacting emotionally and abandoning a plan.

Selling in panic or delaying entry because you’re waiting for “certainty” often leads to missed opportunities. Trying to time the market consistently is nearly impossible – even for professionals.

That’s where working with a financial planner makes a real difference.

A planner helps you:

• Stay focused on your goals.
• Understand the role each part of your portfolio plays.
• Avoid emotional decisions that hurt long-term results.
• Ensure your short-term needs are covered (so you’re not forced to sell during a downturn).

A Better Way to Think About It: Your Financial Timeline

Imagine your portfolio is divided by time:

• Short-term needs (1–3 years): This is the money you may need soon – for spending, big purchases, or an emergency. It should be protected. Think cash, bonds, or fixed income.
• Long-term needs (5+ years): This is where growth matters. Stocks are volatile in the short run but powerful over time.

The stock market’s price today isn’t your price – unless you need that money today. And if your plan is properly built, you shouldn’t.

That long-term allocation to equities? It’s doing its job – compounding for future you.

Common Misconceptions About Investing

• “I should wait for the market to calm down before investing.”
  Unfortunately, the “all-clear” bell rarely rings before markets rebound.
• “Corrections mean something is broken.”
  Not true. They’re normal, and they often reset valuations and offer buying opportunities.
• “I’ve lost money if my portfolio value is down.”
  Not unless you sell. Market fluctuations are temporary. Losses are only locked in when actions are taken without a plan.

Why Equities Matter – And Why They’re Not for Every Franc You Have

Equities (stocks) are essential for long-term growth. Over decades, they’ve outpaced inflation, built wealth, and supported retirements.

But not every pound or franc in your portfolio belongs in equities. That’s why diversified planning matters. The portion you allocate to stocks should align with your time horizon – not your feelings about today’s market.

Your future self will thank you for sticking to a thoughtful, balanced approach – not reacting to headlines.

Emphasising Financial Planning Over Market Forecasting

If you’re feeling unsure in the face of market movement, remember this:

📉 Corrections are normal.
📈 Recoveries are too.
🧭 Your plan is the compass – not the market.

Whether you’re nearing retirement, just getting started, or somewhere in between, now’s a good time to revisit your financial timeline – not your portfolio balance.

Let’s make sure your money is working toward your goals. Book a free introductory meeting today.