Drawdowns: how to survive the bad years without breaking the plan

Published: 2026-04-08

Drawdowns: how to survive the bad years without breaking the plan can look scary because it mixes investing with real-world uncertainty. The trick is to separate what you can control (your ETF choice, currency exposure, time horizon) from what you can’t (short-term FX moves).

What this article will give you

• a clear definition of the risk,
• simple rules you can apply in 5 minutes,
• common mistakes beginners make (and how to avoid them).

Rule #1: Identify the currency you actually spend

Your biggest "currency risk" is the currency you use to pay rent, groceries, and taxes. That is your home currency. Long-term, you want your portfolio to support spending in that currency.

Rule #2: Don’t confuse trading currency with exposure

Buying an ETF in EUR doesn’t automatically mean your exposure is EUR. The exposure depends on the underlying assets (stocks/bonds) and where companies earn revenue.

Rule #3: Equity FX risk matters less than you think (for long horizons)

For global equity ETFs, company fundamentals dominate over decades. FX swings can hurt (or help) over months/years, but they rarely change the long-term logic of broad diversification.

Rule #4: Bonds are different

Currency risk in bonds can dominate returns. If you hold bonds for stability, consider funds that match your spending currency (or use a hedged share class), especially for shorter horizons.

Rule #5: If you worry, reduce complexity

For most beginners, the simplest plan is:

• global equity ETF for growth,
• bond allocation aligned to your spending currency for stability (optional),
• long horizon + consistent contributions.

Reminder: currency risk is real, but over-optimizing it too early often does more harm than good. Start simple, then refine.