The pound in your pocket, pension and property!

This week has seen us return to a degree of stability in the markets; gains made by and large have been held. The media circus has moved on leaving room for commentators like Newsnight's Paul Mason to dissect and try and draw lessons from what happened. If we have reached the bottom and I am not calling it so, but it looks like it may be so, where does that leave us? My sense is that protecting the value of cash has become much more of an issue, after all we have got used to the idea that equities can go down as well as up. We did not however believe that investments which traditionally had little or no volatility could be at risk. However due to the poor risk management within our banking industry that is exactly what happened. Cash deposits and money market accounts have in some cases suffered unprecedented losses. The amount guaranteed under the Financial Compensation Scheme has increased to a maximum of £50,000 but many will want to take advantage of getting higher returns for investing more. You could take the view that the Government would not let a high street bank but you would still be taking, in my view, an unacceptable risk particularly as interest rates come down as they surely will. Even if you spread your cash around a number of banks you still need to avoid situations where the authorised deposit taker covers more than one Brand. Cash deposits in separate accounts with Bank of Scotland, Halifax and Birmingham Midshires would only result in one protection of £50,000. Paying for advice on how to invest cash has now become more necessary and ever.

What about those who have had their pensions and savings diminished by the crisis? Should they flee the equity markets? Probably not, but it really depends on where you are now and what they were invested in. You should consider how your asset allocation performed during the crunch, did you have all your eggs in one basket? Now is the time to get advice on what you need to do for the future.

If all of this was not enough we are now told that houses prices are falling by more than we are earning. Not much you can do if you are heavily mortgaged but if you own your home outright and are over 55 this might be a good time to consider releasing equity from your home. Valuations are still not reflecting the true downturn in the house market and interest rates are lower than ever.

If there ever was a time to consider the protection of the pound in your pocket, the pound in your pension and the pound in your property now is the time to do so.