When you’re an investor, what happens internationally can sometimes have as much impact on your portfolio as domestic events.

That can take many forms.

It could be geopolitical tensions between other countries disrupting supply chains or putting pressure on a particular type of commodity price – as we saw with the tension between Ukraine and Russia.

There might be weather events such as floods or major storms, which affect supply chains or production of goods.

Even an election in a major world economy can affect markets and the confidence in them, such as the US presidential race.

How does the impact happen?

Sometimes the impact is direct – for example, if you’re investing in the shares of an international company and something happens in its home market that affects its outlook.

In other cases, the impact could be indirect. An event could create an interest rate response that could affect the value of a number of different asset classes. Something that shakes confidence could have a flow-on impact into markets.

Sometimes, something happens in one country and then spreads to others. We saw a little of this when Japan’s Nikkei market was volatile recently, although fears that the shakiness could spread to markets outside of Asia were largely unfounded.

Why does it matter?

Understanding the factors that can impact your investment performance can make it easier to know what to expect – and to be less concerned when it happens.

If you’re invested in shares, it’s important to understand that some level of volatility is a natural part of investing. While market movements can feel unsettling, history has shown us that markets rebound – and make further gains – after periods of uncertainty.

However, every investor’s situation is unique, and the best course of action depends on factors like your financial goals, timeline, and risk tolerance. Before making decisions about selling or adjusting your investments, it’s a good idea to speak with an adviser. This can help ensure that your decisions align with your long-term strategy and risk profile, rather than being influenced by short-term market swings.

Recognising that things will happen overseas – whether they are political movements, natural disasters, economic changes or something else entirely – and understanding how your investments will respond is likely to be part of a good investing strategy. As advisers, we’re here to help, even if you just need a sounding board to reassure you that your investments are performing as expected.

Check your risk profile

The important thing is that your investments match your risk profile.

If you have a longer investment horizon, you are likely to be able to take a bit more risk with your investments, which should give you a better outcome, overall.

But if you might need to access your money in the short term, – perhaps to buy a house, or to fund part of your retirement – you may need to take less risk. This can mean your money is more protected from the movements of markets and your balance is less likely to have dropped significantly just at the moment when you need to access it.

You can use tools such as Sorted’s risk profile tool to see what settings might suit you – or simply ask your adviser to assist you with determining your risk profile.

Like to chat?

If you’d like to make sure that your investments are appropriate for your risk profile – or discuss how international events might affect the performance of your portfolio, get in touch with a SHARE adviser. Our team of experts is here to help you – whether that means putting a plan in place at the outset or helping you stay the course to get to your goals.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.