Expert tips on how to navigate investing through a stock market downturn

Higher taxes in the UK, ongoing geopolitical tensions and the uncertainty of US president Donald Trump’s tariffs have prompted fears of a possible global economic downturn.

A trade war could push up prices, contributing to higher inflation at a time where businesses and consumers are already struggling with higher costs. That could hit the profits of companies that you invest in, pushing down their share prices and the value of your portfolio.

Many analysts think the UK may still narrowly avoid a recession but the tariff uncertainty is already weighing on the stock market.

The S&P 500 has fallen 7.8 per cent since the start of 2025, while the FTSE 100 is down 0.54 per cent. It comes as both indices had hit record highs last year.

This may rattle investors, so how do you invest in a downturn?

Don’t panic

Seeing the value of your portfolio drop during a downturn or at any point can be scary but experts warn against panic.

Taking money out now essentially cashes in on the loss though, meaning you don’t benefit as much when markets recover and shares are cheaper to buy.

James Norton, head of retirement and investments at Vanguard Europe, said: “Market volatility is understandably unnerving, but it’s important to remember that market ups and downs are a normal part of investing. Staying the course and riding out the dips, and often buying into them, is usually the right course of action.

“A key reason why investors shouldn’t try to time the market is that they run the risk of missing out on strong performance, which can seriously hamper long-term investment success.

“Historically, the best and worst trading days have tended to occur close together, often during periods of heightened market uncertainty.”

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Stick to your plan

If you are investing for the long term, as experts say you should be, the issue of tariffs or other current uncertainties will be a distant memory for your portfolio in the coming decades.

Joshua Gerstler, chartered financial planner at The Orchard Practice, said: “The reason ordinary people like you and me can build wealth over the long term is because we’re willing to stomach short-term ups and downs.

“Today’s noise is Trump. Yesterday it was the war in the Middle East. Before that, Ukraine. And countless events before that.

“We know it’s impossible to time the markets. That’s why the key is sticking to a well-diversified portfolio that’s built around your personal financial plan—not around forecasts or headlines.

“Sit tight. Stay focused. Let the markets do what they’ve always done—recover.”

It’s important to of course note that while the markets have always recovered, you should pay attention to any individual businesses you invest in, as none have a divine right to thrive.

A good time to buy?

It may sound strange, but putting more money into the stock market may be beneficial, if you can afford it, as share prices may be lower.

Ross Lacey, director at Fairview Financial Planning, said: “Declines in stock markets are a feature of investing rather than a bug. It’s therefore something to plan for.

“For those who are building their wealth, declines in the stock market present opportunities to add to investments at more preferable prices than they otherwise might have.”

Keeping cash on hand at times might feel like a missed opportunity, but when chances arise to buy at better prices, it can be worth it in the long run.

Stay diversified

If you have built a diversified portfolio of different assets and focused on different regions and sectors, then volatility shouldn’t be too much of an issue.

A downturn also shouldn’t make too much difference over the long-term as other better performing parts of your portfolio could pick up the slack if some assets are doing badly.

Tony Redondo, founder of Cosmos Currency Exchange, said: “Historically, investing rules hinge on diversification, long-term focus, and fundamentals. Principles that have weathered recessions and geopolitical shocks down the ages. Trump’s unpredictability hasn’t rewritten these investing rules but amplified their urgency.”

He suggests having cash buffers that allow you to buy on dips, and a long-term focus, adding: “Protect portfolios by diversifying across assets and regions, focusing on quality stocks, and using dollar-cost averaging. Consider hedging with gold and bonds—gold’s up 15 per cent this year but is predicted to rise further. In this era of Trump-driven volatility, the best investors aren’t just reactive—they’re prepared.”

Consider how you make withdrawals

You may still need to access your investments such as for retirement income and Mr Lacey suggests considering how this is done during a downturn.

He added: “It’s important to have a robust plan for what you’ll do during periods where stock markets have fallen and portfolios are down to levels below where they may have been expected to be.

“This tends to mean turning the tap off on any withdrawals, and using other sources to provide income; like a cash warchest or tapping into a pot of more resilient investments.”

As with every other aspect of investing, it’s important to have a plan for different eventualities – not to make snap judgements which might hamper your future wealth.

When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.