Need to know
- Pieter Albertyn, Head of Product Solutions at Momentum Savings, explains why reacting to market dips is like musical chairs – you risk losing long-term growth on your investments.
- Data shows that switching investments during market turbulence often leads to a “behavioural tax,” where your investments miss out on benefiting from significant market recoveries.
- Staying invested, sticking to a long-term plan, and consulting a financial adviser are key to protecting and growing your savings over time.
We’ve all been there: you open your latest investment statement expecting growth, but the market’s "bad mood" has left your balance looking a little “under the weather”. It’s unsettling to see a market dip when you’re diligently saving for life’s big milestones.
The natural reaction? Panic. We want to switch funds or investment strategies before things get worse, to prevent losses on our hard-earned growth. However, before you let a short-term dip spark a permanent change in strategy, let’s look at why reacting to volatile markets is a lot like the children’s game of musical chairs, and what to actually do when your investments dip.
How the game of musical chairs work in investments
You can play the game to any kind of music while players walk around a circle of chairs. When the music stops, everyone must find a chair, but because there’s one chair short, one player is left standing, and is out of the game.
Now imagine the music is the market. One moment it’s steady; the next, it’s all over the place. That’s usually when the panic sets in and people instantly want to jump out. But remember, you can't win the game if you aren't on the floor.
Staying put may feel risky when the tune is chaotic, but it’s often the safest way to protect your long-term investment growth.
You can't win the game if you aren't on the floor.
The cost of jumping out too soon when markets dip
Unlike musical chairs, there will always be a fund to invest your money. But once you’ve jumped out of a well-considered investment, you face a familiar dilemma: Where to now?
Do you rush into a money market fund because it feels safe (even if the growth is ultra-conservative)? Or do you pause, reassess, and try to find a new “chair” that offers both comfort and decent long-term growth to look forward to?
This moment of uncertainty carries a cost. And it’s not just emotional - it’s financial.
Our colleague from the Momentum Financial Planning and Advice team, Paul Nixon, refers to this penalty as “behavioural tax.” His research shows that knee-jerk reactions like switching investments in response to short-term market noise, often result in a real and measurable loss of growth.
What the numbers reveal
For instance, by April last year the global tariff surprises of the American president, Donald Trump, had made a lot of people jumpy.
Nixon analysed the behaviour of clients invested in a post-retirement product - how much were they switching, and into which alternative funds?
He compared from September 2023 to September 2024 with April 2025. The results were telling:
- Investment switches increased by 130% during the period of market turmoil.
- More than R1 billion flowed into the Momentum Money Market (pdf) as investors sought perceived safety.
Nixon calculated that clients who switched then, would have lost yearly growth of more than 10%. But you must also consider how well the All-share index (ALSI) of the JSE has grown since then, and the loss would have been far larger.
By the end of 2025, the Johannesburg Stock Exchange All Share Index (ALSI) had grown by over 30%. This meant that clients who were stuck in less risky assets missed out big time. His research further shows that anxious investors, and those trying to read and time the market, lost out the most.
In short: the price of “playing it safe” turned out to be anything but safe.
How to win the game by staying invested
Reacting in the heat of the moment is usually the biggest threat to your investment. To win the game, you must tune out the noise. Here are ways to keep your cool and your seat when the market music gets chaotic.
Remember: Long-term plans beat short-term reactions
Let your well thought-through long-term plan guide your decisions. Short-term reactions will almost always cost you growth, and cause even more anxiety.
Being invested is a long game, like a marathon. To apply short-distance rules, is to mess up the game plan. A good financial adviser will also tell you that.
When the music gets loud, stay seated
Markets will continue to play unpredictable tunes. When that happens, resist the urge to leap from your chair. This year, if the markets are playing a maddening rumba, rather put your earphones on. Listen instead to a gentle melody and keep your backside safely on your investment seat.
Market volatility is a test of nerves, not necessarily a sign to change your investment strategy. By avoiding the "behavioral tax" of panic-switching, you position yourself to catch the growth that follows the dip. This blog post was adapted from an article seen on FA News.
Get advice
From saving for a home and your child’s education, to your eventual retirement, professional guidance can help you take control of your investments. Through Momentum Savings, you can partner with a financial adviser for a savings plan that fits your specific goals and budget. Start where you are today and gain the confidence to own your financial future.
About the author
Pieter Albertyn
Head of Product Solutions at Momentum Savings
Pieter is on a personal mission to empower more South Africans to be better prepared for what life throws at them.
He is a qualified actuary with over 20 years of experience spanning across pensions, risk and savings industries, in roles ranging from IT to actuarial valuations, product management and product development. He joined Momentum in 2016 and serves as the Head of Product Solutions for Momentum Investo.
Pieter completed a leadership programme with Duke University in 2021 and has a keen interest in delivering value through innovation.
Share this
@MomentumZA
@Momentum_za
Momentum_2
@momentumza
momentumgrouptv
