Market falls are normal: why long-term investors should expect them
When markets fall, it can feel unsettling — even when you know volatility is part of investing.
You may see the value of your investments reduce, hear worrying headlines in the news, or wonder whether you should act before things get worse. At times like this, it is easy to feel that the latest market fall is unusual — or that it signals something fundamentally different.
However, market falls are not rare. They are a normal and recurring part of investing.
The important question is not whether markets will fall again. History suggests that they will. The more useful question is whether your investment plan is designed to cope with those periods when they happen.
Market falls happen more often than many investors realise
Over a long investment journey, investors should expect to see markets fall on a regular basis.
Although every period is different, the following provides a useful guide to what investors may experience when investing predominantly in shares:
| Market fall | How often it may occur |
| A fall of 5% or more | Around once or twice a year |
| A fall of 10% or more | Roughly every one to two years |
| A fall of 20% or more | Approximately every four to six years |
| A fall of 30% or more | Perhaps once every eight to twelve years |
| A fall of 40% or more | Uncommon, but possible over a long investment lifetime |
These figures are based on broad historical patterns and should not be viewed as predictions. Markets do not follow a timetable, and falls can occur closer together or be separated by long periods of growth.
For investors, the purpose of this table is not to predict exactly when the next fall will happen. It is to show that volatility should be expected and planned for, rather than treated as a surprise each time it appears.
Nevertheless, the overall message is clear:
A market fall is not necessarily evidence that something has gone wrong. It is often simply part of the normal journey of investing.
What might happen over your investment lifetime?
If you invest for five years, you may experience several falls of 5% or 10%, and it would not be unusual to encounter a fall of 20% or more.
Over ten years, you are likely to experience numerous periods of market volatility and potentially several significant market declines.
Over twenty years, you should expect market falls to occur repeatedly. You may experience several bear markets and possibly one particularly severe period when markets fall by 30% or more.
This can sound concerning when viewed in isolation. However, it is important to remember that an investment journey is not normally a smooth upward line.
It is more likely to look like a series of advances, setbacks, recoveries and periods of uncertainty—with long-term growth occurring despite the temporary declines along the way.
A fall during the year does not always mean a negative year
A useful way to think about this is to separate what happens during the year from what happens by the end of the year.
One of the most surprising aspects of investing is that markets can experience a significant fall during a year and still finish the year with a positive return.
For example, a market may:
- Begin the year at 100
- Fall to 88 during a period of uncertainty
- Recover as confidence returns
- Finish the year above where it started
An investor following the news during the fall may have experienced considerable concern. Yet, when looking back at the year as a whole, the final result may have been positive.
This is one reason why short-term headlines can sometimes give a very different impression from long-term investment outcomes.
Why do market falls happen?
Markets respond to a wide range of events, including:
- Changes in interest rates
- Inflation concerns
- Economic slowdowns
- Political uncertainty
- Wars and geopolitical events
- Changes in government policy
- Company profits and economic expectations
- Investor confidence and sentiment
Some market falls are caused by events that appear significant at the time but have little lasting impact. Others develop into more prolonged economic or financial challenges.
The difficulty is that nobody can reliably predict in advance which events will be temporary and which will have a greater effect.
Trying to move investments in and out of the market based on short-term forecasts can therefore be difficult. An investor may avoid some of a market fall but then miss part of the recovery.
Recoveries can begin when confidence is still low
Markets are forward-looking.
They do not wait for every problem to be resolved before recovering. In many cases, markets begin to rise while economic news remains uncertain and confidence is still low.
This means that waiting until the outlook “feels safe” may result in missing some of the recovery.
The strongest periods of market growth can sometimes occur shortly after significant falls, when many investors are still cautious.
For long-term investors, remaining invested can therefore be just as important as selecting the investments in the first place.
Your portfolio should reflect your ability to tolerate market falls
This does not mean every investor should invest entirely in shares, or that everyone should accept the same level of risk.
A suitable portfolio should reflect a range of personal factors, including:
- Your financial objectives
- Your investment timeframe
- Your attitude towards investment risk
- Your ability to withstand losses
- Your need for income
- When you expect to access your money
- The level of short-term volatility you are comfortable accepting
A portfolio designed for long-term growth may experience larger temporary fluctuations than a more cautious portfolio.
This is where financial planning becomes important: it helps you find an appropriate balance between growth, risk and your individual circumstances, rather than simply choosing investments in isolation.
The importance of having a plan
Market falls can feel very different when you have a clear financial plan.
If your investments are linked to long-term objectives, and you understand that temporary falls are expected, it may be easier to view volatility as part of the journey rather than as a reason to make an immediate change.
A financial plan can help answer important questions such as:
- When will I need to access this money?
- How much growth do I need to achieve my objectives?
- How much short-term volatility can I realistically tolerate?
- Do I have sufficient cash available for shorter-term expenditure?
- Would a market fall affect my ability to meet my long-term goals?
These questions are often more important than trying to predict what markets will do next.
A market fall is not automatically a reason to change course
During periods of uncertainty, it can be tempting to sell investments and wait for markets to settle.
However, selling after a fall can turn a temporary reduction in value into a permanent loss. The investor must then decide when to reinvest—and that can be difficult when news remains negative.
Sometimes a change to an investment strategy may be appropriate. For example, your circumstances may have changed, you may need access to money sooner than expected, or your portfolio may no longer reflect your objectives.
However, a market fall on its own does not necessarily mean that your long-term plan is no longer suitable.
Before making changes, it is important to understand whether the decision is being driven by a genuine change in circumstances or by understandable short-term concern.
Looking beyond today’s headlines
Every major market fall has felt significant while it was happening.
Investors have experienced periods of high inflation, recessions, financial crises, political uncertainty, global pandemics and geopolitical conflict. At the time, it is often difficult to see how markets will recover.
Yet, over long periods, markets have historically recovered from previous declines and continued to create value.
Past performance is not a guide to future returns, and future market recoveries cannot be guaranteed. However, history demonstrates that market falls and long-term investment growth have often existed alongside one another.
The presence of market falls does not mean that long-term investing has failed.
In many cases, market falls are simply part of the process.
The aim is not to remove uncertainty altogether. Instead, it is to make sure your investments, cash reserves and wider financial plan are working together so that short-term market movements do not derail long-term objectives.
The key message
If you are investing for the long term, market volatility should not be viewed as an unexpected event.
Over a typical investment lifetime, you are likely to experience:
- Many falls of 5% or more
- Several falls of 10% or more
- A number of market declines of 20% or more
- Potentially at least one major market event
These periods can be uncomfortable, but they are not unusual.
A well-structured financial plan should take into account the possibility that markets will fall. Your investment strategy should be designed not only for periods when markets are rising, but also for the periods when confidence is low and values temporarily decline.
Market falls are not necessarily a sign that your investment strategy has failed. They are a normal part of investing. The objective is not to avoid every fall—it is to ensure that your financial plan is built to withstand them.
At Corcillium Wealth Management, we help clients understand their objectives, build an investment strategy that reflects their circumstances, and stay focused when markets become uncertain.
If you would like to review whether your current investments remain aligned with your goals, risk tolerance and investment timeframe, we would be happy to help.
Please remember that the value of investments can fall as well as rise, and you may get back less than you invest. Past performance is not a reliable indicator of future performance. This article is for general information only and does not constitute personal financial advice.
Approved by 2Plan Wealth Management on 17/08/2026