Are you tinkering with your portfolio every time there’s bad news, even war? You could be doing more harm than good.

Ukraine’s troubles are being felt emotionally around the world and the battle has also put a dent into people’s hard-earned savings.

With stock markets already on edge, thanks to ongoing inflationary pressures and the impact of rising interest rates, the Ukraine/Russia war has caused markets to wobble again.

Panic selling might be a mistake. When you invest money in the markets, you do so on the understanding that prices can go up and down. Stocks and shares have historically delivered a better return than cash in the bank, but there is also a chance you could lose money. People accept that risk in exchange for potentially higher rewards.

Running away at the first sign of difficult times isn’t a good move. You risk being out of the market when share prices bounce back. This isn’t guaranteed to happen, but history would suggest a lot of markets recover quickly from times of turmoil.

Look at this chart of the FTSE 100 index. The big drop in the UK market happened on 24 February as Russia launched a full-scale invasion of Ukraine, sending the FTSE 100 down nearly 4% in a day. Many share prices fell by an even greater amount.

The following day, the FTSE 100 recovered most of all that lost territory as sanctions were put on Russia by the West.

Constant tinkering with your portfolio should be avoided. It is tempting to keep dumping any positions that aren’t rallying – firstly for fear they will never make you money and secondly because you want to use the proceeds to buy more of what’s already doing well.

You might be better off looking at laggard holdings and seeing if something has changed to the investment case – if the answer is no, don’t sell it unless you really need the cash.

Just look at oil producers, banks, tobacco manufacturers and defence companies – no-one wanted to touch them a year or two ago, but more recently they’ve been doing well on the market. If you had sold when they were in the doldrums, you would have missed out on the recovery rally.

In general, a diversified portfolio should always have something that isn’t doing as well as other positions. The whole point is to spread your risks in different areas of the market. If you put all your money in one part of the market, you would really feel the pain when that area goes out of favour.

Even though investing during times of turmoil can be uncomfortable, it’s important to hold your nerve and wait out the market volatility. Just ask those who sat tight through the Covid sell-off in February 2020, global financial crisis in 2008, and countless other difficult times which saw share prices fall and then rebound. Investing is all about patience and hopefully the rewards will come in time.

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