Question

I am really worried about what is happening in Iran.  Should I move my investments into gold or the money market until things settle down?

Answer

The current war in the Middle East is a cause for concern, and our natural instinct is to try to protect our capital as best we can.  Moving to safer investments does seem like a good idea. However, this does come with risks. Let me explain:

When investors ask whether they should move into gold or cash, they are usually trying to do two things at once. They want to avoid a potential market drop, and they hope to reinvest later when markets feel “safe” again.

The problem is that no one — not even professional fund managers — can reliably do this.  To successfully time the market, you must make two correct decisions:

1. When to sell
2. When to buy back

Most investors manage to get neither right. What often happens is that investors sell after markets have already fallen and then wait too long to reinvest. By the time they feel comfortable buying again, markets have already recovered. The result is that they lock in losses and miss the recovery.

Gold

Gold is often described as the ultimate safe-haven asset, and during periods of geopolitical tension investors often move towards it as a store of value.

Gold can perform well during crises, but it has a key limitation: it produces no income and no compounding growth. Unlike shares, which represent ownership in companies that generate profits and grow over time, gold simply holds its value.

Over long periods, equities have significantly outperformed gold, which is why gold is typically used as a hedge within a diversified portfolio rather than as a replacement for long-term investments.

Money market

The money market is another place investors turn to when markets feel uncertain because cash values do not fluctuate like shares.

However, this sense of safety can be misleading. If inflation is higher than the return on cash investments, the real value of your money slowly declines. While cash plays an important role for short-term needs and emergency funds, it is not designed to build long-term wealth. Over time, investors still need exposure to growth assets that can outpace inflation.

When uncertainty rises, investors naturally want safety.  But history tells us something important: reacting emotionally to geopolitical events is almost always the wrong investment decision. Before making any changes to your portfolio, it is worth stepping back and looking at how markets have actually behaved during global crises.

Markets Have Survived Every Crisis So Far

Since the early 1900s investors have lived through two world wars, multiple Middle East conflicts, the 9/11 attacks, the Global Financial Crisis, and the Covid-19 pandemic.  Each of these events felt catastrophic at the time and yet the global equity market continued to grow.

If you had sold out of the market every time a geopolitical conflict occurred, you would have missed some of the strongest recovery periods in history.  Markets tend to fall quickly when uncertainty appears, but they also recover far sooner than most people expect.

The biggest danger for investors is not the crisis itself — it is the temptation to make a permanent portfolio decision based on a temporary event.

Diversification Is the Real Defence

Rather than trying to predict the outcome of global conflicts, the far more effective strategy is diversification.

A properly structured investment portfolio typically includes exposure to:

• Different asset classes
• Multiple geographic regions

When one asset class struggles, another often performs well.

For example, geopolitical tensions in the Middle East may affect oil prices, defence stocks, currencies and emerging markets differently.  Diversification allows investors to benefit from this balance without needing to guess which asset will outperform next.

Should You Move Your Investments?

In most cases, the answer is no.  Making drastic portfolio changes based on geopolitical news is rarely a good investment strategy.

Instead, you should ask three more important questions:

1. Is my portfolio properly diversified?
2. Does my asset allocation match my long-term goals and risk tolerance?
3. Do I have enough liquidity for short-term needs, so I don’t need to sell growth assets during market volatility?

If those foundations are in place, short-term market turbulence becomes far less concerning.

One of the most difficult parts of investing is learning to tolerate uncertainty.  The world will never feel completely stable. There will always be wars, political tensions, economic shocks and unexpected crises.  Yet despite all of this, global markets have continued to grow over time.

Successful investors are not those who avoid every crisis.  They are the ones who remain disciplined when others panic.  History suggests that staying invested — with a well-diversified portfolio — is usually the strategy that wins in the long run.