Financial Planning Amid The Iran Crisis: Should I Stay Invested?

The latest escalation involving Iran has prompted immediate market responses. The S&P 500 declined by around one per cent in the aftermath of the initial attacks, while European and UK markets experienced slightly sharper falls due to greater exposure to energy supply risks. The Dow Jones initially dropped sharply before recovering much of its losses by the close.

These movements, while unsettling, are not unusual. Markets respond quickly to uncertainty, often pricing in worst-case scenarios before stabilising as more information becomes available.

Volatility, while uncomfortable, is a natural and expected part of investment management. It is often described as the price of admission for long-term returns.

History provides valuable perspective during uncertain times. While geopolitical events can trigger sharp market reactions, the long-term impact has typically been limited.

Data shows that following major geopolitical shocks including the global financial crisis, the COVID lockdown, the Suez crisis and Iraq’s invasion of Kuwait:

• Markets have delivered positive outcomes approximately 83 per cent of the time
• The average decline one day following the shock is around 1.2 per cent
• The typical peak-to-trough drawdown is about 5.0 per cent
• Markets tend to reach their lowest point on average 22 days after the event
• Recovery to previous highs has taken around 47 days on average 

These figures highlight an important pattern - market declines linked to geopolitical events are often sharp but short-lived. Markets have always recovered.

A key question investors must consider is whether current events represent a temporary disruption or a lasting structural shift.

At present, the evidence suggests this is a period of short-term, sentiment-driven volatility rather than a fundamental change to the global economic system. There are no clear signs of systemic financial breakdown or widespread disruption to global economic infrastructure.

While oil prices have risen due to concerns around the Strait of Hormuz, a key supply route for oil and other products including fertiliser and liquefied natural gas (LNG), this reflects precautionary behaviour rather than a complete halt in production. 

Understanding this distinction is critical. Reacting to short-term noise as though it were long-term change can lead to costly investment decisions.

Well-constructed portfolios are built to withstand uncertainty, which should offer reassurance in the current environment. At Hoxton Wealth, we typically favour a balanced approach that includes a mix of equities and fixed income across multiple regions and sectors.

Equities provide long-term growth potential, while bonds often act as stabilisers during periods of economic stress. Although recent years have been challenging for bond investors, they continue to play a vital role in wealth protection, particularly when interest rates are elevated.

Global diversification also reduces reliance on any single region or sector. For example, while Europe may be more directly impacted by energy disruptions, other areas of the market, such as US technology, remain largely unaffected.

This structure is intentional. It allows portfolios to absorb shocks without requiring reactive changes.

One of the most common investor questions during periods like this is whether to move to cash or safer assets.

The short answer is no! Attempting to time the market is extremely difficult, even for professionals. Selling during periods of decline can lock in losses and increase the risk of missing subsequent recoveries. History consistently shows that some of the strongest market gains occur shortly after periods of sharp decline.

This graph demonstrates the danger of reacting to market noise. The dip reflects the impact of punitive tariffs introduced in April 2025, while the recovery highlights how investors who sold at that point would have missed the rebound.

While patience is often the most effective response, there are circumstances where a review is appropriate.

You may wish to revisit your financial planning strategy if:

• Your personal circumstances have changed
• Your investment goals or time horizon have shifted
• Your tolerance for risk has altered
• There are signs of sustained, structural economic disruption 

Absent these factors, making changes based solely on current headlines may do more harm than good.

The current situation in Iran is serious and evolving. However, from an investment perspective, the data does not suggest a need for immediate or reactive portfolio changes.

Markets have consistently demonstrated resilience in the face of geopolitical uncertainty. For disciplined investors, remaining focused on long-term objectives is often the most effective course of action.

While doing nothing can feel counterintuitive, it is often the most valuable decision during periods of heightened volatility. The cost of exiting in uncertain times is missing the recovery rallies. 

We want to reassure you that at Hoxton Wealth, we are taking a proactive approach to the current situation and continue to monitor developments closely. We remain committed to clear and transparent communication, and are always available to support our clients with guidance and reassurance when needed. We will also continue to share timely insights through our newsletters, blog and webinars.

If you have any questions or would like to discuss your portfolio, please do not hesitate to contact your adviser.

In the meantime, the most important message is simple - stay calm, stay invested and remain focused on your long-term objectives.

If you are not currently a client and would like to review your portfolio or discuss your financial planning, our client services team would be pleased to speak with you.