HERE'S A DIFFERENT VIEW OF VOLATILITY

It's not all bad: What goes down can also go up

Here's a different view of volatility - it's not all bad: What goes down can also go up.

Short-term rises and falls may make you feel like you're riding a roller coaster. However, there is one key difference: over the long-term, investment returns have trended upwards, so when the ride ends, you're not back exactly where you started.

Please remember, past performance is no guarantee of future performance. The value of investments can go down as well as up and you may get back less than you originally invested.

Two perspectives on volatility

Stock values have generally risen upwards over the long-term despite steep periodic declines. From a long-term perspective, the declines don't look nearly as steep as they probably felt at the time.

Short-term volatility

The chart below illustrates the rollercoaster feeling — it shows the returns of UK stocks each year for the last 20 years, showing the up and down volatility experienced over the short term.

short term volatility

Long-term upward trend

The chart below also shows the returns of UK stocks, but shows how the up and down, "rollercoaster" performance of those individual years has historically added up to positive returns over the long term.

long term investment trends

Living With Volatility's Downside

It can be difficult for clients to take a long-term perspective during volatile markets with daily injections of bad news. If you are able to keep their focus on the long-term, you'll have helped them master the primary approach to living with volatility's downside.

Franklin Templeton Investments has a range of funds which take a long term view, leveraging disciplined, time-tested strategies and assessing risk as rigorously as they seek reward.

View our investment strategies

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