Why is the stock market unsettled?

‘Unsettled’ is the right word – the stock market has seen increased volatility in the latter half of this year as people pull their money from investments to park it in interest-paying savings accounts. That’s because rates are higher than they’ve been in decades.1

And by parking your money in a savings account, you’re guaranteed to earn interest on it – it’s not subject to market volatility or price fluctuations. So when interest rates are 5%, that’s a guaranteed 5% return on your money. Remember though, if the inflation rate is higher than the interest rate you’re earning on your savings, you’re still going backwards.

But, this confuses the purpose of investing. It’s not for the short term – and you shouldn’t get spooked and withdraw when things get choppy. If you’re looking to grow your emergency savings or your holiday fund, a savings account is the best place for it. On the other hand, if you’re looking to grow your money over time, investing is the answer.

For example, by investing in Moneybox’s Adventurous Starting Option for 10 years between 2013 and 2023, you’d have achieved an average annual return of 10.1% – which is well ahead of inflation.*


What to do when the stock market is up

If you’re already investing, the best thing to do at all times is simply stick to your plan. You’ll know what your goals are and what you’re trying to achieve. You’ll also know how much money you can afford to invest each month under your current circumstances, and how long your investment time horizon is.

Markets being up shouldn’t be a reason to start selling your investments and realising any gains you’ve made ahead of time, and it also shouldn’t be the only reason for looking at rebalancing your portfolio. Reinvesting profits is one of the best ways to supercharge your investment account, and it’ll help to maximise your gains within your chosen timeframe.


What to do when the stock market is down

On a similar note, when the stock market is down, it shouldn’t be a reason to panic. Over the last 50 years, the market has experienced record highs as well as record lows. But it all evens out over time. That’s why a useful metric to use when looking at stock market performance is average annual returns.

In this way, stock market declines aren’t something to fear, because over time they’ll be  smoothed out by stock market gains. That’s why investing is referred to as being best for the long term (at least 5 years), and why it’s always better to look at the long-term picture when you’re investing, rather than paying attention to or changing your plan because of short-term market fluctuations.


How to invest with Moneybox 

Our investing proposition was built with one thing in mind: to make investing with Moneybox easy, whether you’re starting from scratch or a seasoned hand. You can jump in with our Starting Options, which are just that – a starting portfolio of investments, handpicked by experts.

Or, if you want to take more control over your investments, you can customise your Starting Option to access our full range of funds, and if you’re investing with a Moneybox Stocks & Shares ISA, our range of US stocks.

You can open a Stocks & Shares ISA in minutes. Plus, if you’ve got investments in an ISA elsewhere, you can request a transfer to Moneybox entirely in-app. There are no paper forms to fill out, and it only takes a few minutes. Download the app today to start investing with Moneybox.


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1 Bank of England

* Past performance is not a reliable guide to future gains. You may get back less than you invest. Annual returns are net of fees and based on the scenario of £1,000 invested in 2013 followed by monthly deposits of £50.

All investing should be long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest.