What should you do if the stock market falls?

According to Judith Sanders, Investment Strategist at ABN AMRO, it is especially important to remain calm: “We all know this in theory, but it’s not easy when you see a downward trend in your portfolio. Nevertheless, it is an important starting point. Research shows that investors often make choices based on feelings and emotions, which are often irrational and wrong.”

Market turmoil and red numbers are unpleasant, but your Profile Fund within Guided Investing has been carefully selected based on your investment objective, target amount, and the risk you want to take (your profile). Within this profile, the ABN AMRO Investment Committee, an international team of experts, responds to developments in the financial markets and future expectations. They translate this into important choices in the portfolio. They determine the weighting of the products within your portfolio and can temporarily invest more or less in stocks or bonds, ensuring that your portfolio fits both you and the market situation even in turbulent times.

Judith Sanders explains: “If you are not invested, you miss the worst days but also the best days. And it's precisely those days that are important for a positive return. Being invested on the good trading days is crucial. The total annual result depends on this, and not being invested during these days has a strong negative effect on your total return. Furthermore, no one can predict when the best and worst stock market days will occur in a year.”

Scientific research shows that investors find it extra difficult to stick to the original investment plan if the markets fall for days on end. Judith: “This makes it extra important to work systematically and look at investments with distance and without emotion. In Guided Investing, experts determine the content of your portfolio for you.”

Also consider: the longer you invest, the more you benefit from the advantage of compounding returns. This can contribute to wealth growth in the long term. A longer investment horizon offers more room to absorb temporary declines in value, but it does not guarantee a positive return.

A falling market naturally also offers opportunities. But experience shows that timing is tricky: you only know afterward whether you entered at a good time. You can also regularly invest a fixed amount to spread your risk over time, which is called periodic investing. This averages the purchase price and increases your chance of potential returns. You can easily set up periodic investing via the ABN AMRO app or Internet Banking.

Hopefully, this article gives you some more insight. It’s quite understandable if you lose sleep over a stock market fall and perhaps even consider quitting. But ideally, you are investing with money you can spare. Try to look at your investments without emotions and ask yourself: what am I doing it for? Can I still achieve my long-term goal? If so, you don't need to change anything. Regularly check if the chosen Profile Fund still suits you. You can quickly see in Internet Banking what happens to your investment goal if you change your Profile Fund.