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During market turbulence, such as the significant downturn in 2022 when the US S&P 500 index dropped around 20%, investors often seek safer alternatives to riskier assets like stocks and shares.
To protect your capital and possibly achieve modest growth during volatile periods, consider lower-risk investments that may offer stability. Although no investment is completely risk-free, and your capital is always at risk, some options provide more security than others:
Savings Accounts: These accounts offer security for your capital, though there’s a risk of provider failure. In such cases, the UK government’s Financial Services Compensation Scheme protects deposits up to £85,000 per person per institution.
High-Interest Current Accounts (HICAs): These accounts typically offer higher interest rates than standard savings accounts and may include cash rewards for new customers. HICAs often have requirements, such as a minimum monthly deposit and limits on interest-bearing balances, and may charge monthly fees. Ensure to compare any potential fees with the benefits of the higher interest rate. These accounts are regulated by the Financial Conduct Authority and fall under the Financial Services Compensation Scheme.
Gold: Investing in gold can add stability and diversification to your investment portfolio, especially during economic uncertainty. It is often viewed as a ‘safe haven’ asset, providing a hedge against inflation and economic instability.
