What Happens If the Market Falls After I Start Investing?

Last updated: January 2026

This is the fear almost everyone has — for good reason

If you’ve ever thought:

“What if I finally invest… and then everything drops?”

You’re not being dramatic. You’re being realistic.

This fear stops more people from investing than lack of knowledge, income, or access. And most advice dismisses it too quickly.

This post doesn’t.

Instead, we’ll look at:

• what actually happens if markets fall after you start

• why early downturns aren’t the disaster people imagine

• what does cause long-term damage

• and how to protect yourself from panic decisions

No reassurance slogans. Just mechanics.

First: market falls are normal, not rare

Markets don’t move in straight lines.

Even in long periods of growth, there are:

• pullbacks

• corrections

• multi-year flat periods

If you invest for decades, you will experience downturns. That’s not pessimism — it’s the baseline assumption.

The question isn’t if markets fall.
It’s how your strategy behaves when they do.

The difference between price drops and permanent damage

This distinction is critical — and often misunderstood.

Price drops (volatility)

• values move down temporarily

• common and expected

• part of market behaviour

Permanent damage

• selling at a loss and not re-entering

• abandoning investing entirely

• taking on risk you can’t sustain

Most long-term damage comes from decisions, not declines.

Why starting just before a fall isn’t as bad as it feels

Let’s say you invest, and markets fall soon after.

What actually happens?

If you invest gradually

• new contributions buy at lower prices

• average cost often improves over time

• downturns benefit future contributions

This is one reason regular investing exists — not to optimise returns, but to reduce timing risk.

If you invest a lump sum

Yes, a lump sum before a fall feels worse emotionally.

But even then:

• history shows markets have recovered over long horizons

• recovery matters more than the entry point if you stay invested

The real risk is not the fall — it’s exiting permanently.

The role of time (and why early losses feel so intense)

Early in your investing journey:

• your balance is small

• contributions dominate growth

• percentage drops feel personal

This is psychological, not mathematical.

In early years:

• losses hurt more emotionally

• but matter less financially

Later:

• balances are larger

• volatility feels less dramatic

• habits do more work than decisions

This is why patience — not confidence — is the real requirement.

Why people panic sell (and how to avoid it)

People don’t panic sell because they’re irrational.

They panic sell because:

• they invested money they might need

• they didn’t expect volatility

• they had no buffer

• they were watching values too closely

The fix isn’t “be braver”.
It’s change the setup.

The three protections that actually matter in a downturn

1. A cash buffer

A buffer:

• stops you needing to sell investments

• turns downturns into background noise

• protects behaviour, not returns

This is why buffers come before investing.

2. Simplicity

Complex portfolios:

• invite tinkering

• encourage second-guessing

• increase stress

Simple portfolios:

• reduce decisions

• reduce temptation

• reduce mistakes

3. Low checking frequency

Checking daily doesn’t protect you.
It amplifies fear.

Most long-term investors benefit from:

• automated contributions

• infrequent reviews

• intentional distance

If a strategy requires constant monitoring, it’s fragile.

What actually causes long-term underperformance

Research consistently shows that long-term underperformance usually comes from:

• selling during downturns

• trying to time exits and re-entries

• switching strategies repeatedly

• abandoning investing altogether

Markets recover.
Behaviour often doesn’t.

“Should I wait for markets to calm down?”

This is the most tempting idea — and the most dangerous.

Why?

• calm is visible only in hindsight

• people wait for certainty that never arrives

• years pass without starting

The cost of waiting is often invisible — but real.

A better question to ask

Instead of asking:

“What if markets fall after I invest?”

Ask:

“What would force me to sell if they did?”

If the answer is:

• needing the money

• stress

• fear

• lack of understanding

The solution isn’t timing.
It’s structure.

When it does make sense to delay investing

There are times when waiting is sensible.

You should usually wait if:

• you have no emergency buffer

• your income is unstable

• you’re relying on credit for essentials

• investing would increase anxiety

Waiting here isn’t fear.
It’s sequencing.

A realistic mindset shift

Investing isn’t about avoiding downturns.

It’s about:

• expecting them

• building around them

• not letting them dictate decisions

If your plan only works in good markets, it isn’t a plan.

How this fits the Slow Money approach

Slow Money doesn’t try to outsmart markets.

It:

• reduces avoidable risk

• builds habits that survive stress

• prioritises staying invested over cleverness

That’s why it works for nervous investors.

Bottom line

Markets falling after you start investing is uncomfortable — but not catastrophic.

What causes real damage is:

• investing without a buffer

• reacting instead of planning

• treating volatility as failure

If you expect downturns and plan for them, they lose their power.

Read next

If this fear is holding you back, the bigger framework matters.

👉 Investing for the Nervous: A Grounded Guide to Starting in 2026 (UK + US)
It explains how buffers, accounts, behaviour, and risk fit together — without hype or pressure.

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