Why patience beats prediction in volatile markets – it could have left your portfolio 10% better off in 2025

March 25, 2026

Market volatility was a key feature of tax year end last year, providing an important lesson for UK investors ahead of the 5^th April deadline this year. Vanguard analysis suggests that, while markets rising and falling is a natural part of investing, reacting to short-term swings erodes long-term returns.

James Norton, head of retirements & investments, Vanguard Europe, said, “Investing is a marathon not a sprint.

“While volatility can feel unsettling, it is a normal part of investing, Successful investing isn’t about trying to time when to buy or sell, but about having a clear plan, staying invested and contributing regularly. By doing so and maintaining a balanced, diversified portfolio investors give themselves the best chance of investment success and meeting their long-term goals.”

Key data & insights

Had an investor sold their investments and moved to cash on the 8^th of April 2025, in response to tariff induced volatility, at the time, and then re-entered the market a month later on the 12^th May, they would have cut their returns from 14.4% to 4.8% (nearly £1,000 less on a £10,000 portfolio)¹.
Because markets recover over time, by staying invested and focusing on the long-term you’re more likely to see your money increase over time, even if there are rough patches along the way: Since 1972, the MSCI World Index has gone through eight bear markets. Each time it has recovered and grown².

Diversification matters: While US tech stocks dominated headlines, a globally diversified portfolios paid off in 2025, with the UK and emerging markets up 23% versus 11% for the S&P 500^3.
Recognise that highs are often followed by more highs: You may feel uneasy when markets are rallying, but history shows that markets often go on to reach more highs⁴.

¹ Source: Vanguard calculations, using data from Refinitiv, as of 2 December 2025.

² Source: Vanguard calculations in GBP, based on data from Refinitiv, as at 15 July 2025.

³ Source: UK, emerging markets, Europe ex-UK and Japan shares are represented by their equivalent MSCI indices. Vanguard calculations in GBP, using data from Factset, 1 January to 30 November 2025.

⁴Source: Vanguard calculations based on data from FactSet, as 31 August 2025.