Are Your Investments Protected If The Investment Platform Fails?

If we forget the performance of our investments for just one moment, and instead let’s look at how safe your stock market investments are, should the investment platform or fund fail.

The first question we need to ask is are our investments protected at all if the investment platform fails?

There no point making an absolute killing on your investment if you would lose the lot should the investment platform go bust.

Many of you reading will either have or will have massive investments pots. If you’re anything like us and hoping to achieve financial freedom, then you will be building up an enormous investment pot that will generate you an income while you enjoy life – the way life is meant to be! You’ll never enjoy it fully if you are always worried about losing it.

You might not have put much thought into how safe your investments are because you may have assumed that the UK government wouldn’t abandon you if the investment platform did go bust. Surely, they wouldn’t?

Or perhaps you know that your investment pot is below the FSCS limit and therefore you think you’re safe. Well… it’s not that simple!

We’re not financial advisors – just investors! – but we did carry out a lot of research to corroborate all of the points in this video. It would be worthwhile doing your own due diligence before applying this info to your own portfolio, but everything we do say is believed to be accurate at the time of writing.

This article is about protection for stock market investment platforms – Peer to Peer Lending is not covered by these rules.

Editor’s note: Investment platforms are giving away free stuff! Open a new investment account on any of the many platforms listed on the Offers page, and scoop up freebies including cash back of up to £100, free stocks worth up to £200, or management fees cancelled on your portfolio!

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Financial Service Compensation Scheme (FSCS)

The FSCS is the protection scheme that will likely save your bacon should your investment platform or fund go bust. It’s essentially a completely free insurance policy as it’s funded by the financial service industry.

Actually, its not really free because it’s funded by levies on authorised firms and they will of course pass those costs on to their customers via their fees. So, you indirectly pay for this protection.

Taken straight from the FSCS website, the FSCS exists to protect customers of financial services firms that have failed. If the company you’ve been dealing with has failed and can’t pay claims against it, they can step in to pay compensation.

In 2008 they recovered £20 billion, so based on that history we can consider it to be reliable protection.

The FSCS scheme is meant to protect your investments up to £85,000 if the platform fails - note that it doesn't cover P2P platforms

The First Thing You Need To Do

Before making any investment, you need to check that your investment provider or adviser is authorised by the Prudential Regulation Authority or the Financial Conduct Authority to carry out the type of regulated activity that FSCS can protect.

How Do You Check?

If you’re going with a well-known company like Interactive Investor you can just assume it is, but to check it’s very straight forward and it’s better to be safe than sorry. Every company that is regulated will say it somewhere on their site but obviously don’t trust that because any company that is hoping to defraud you would pretend to be.

To check properly yourself you need to find their FCA’s reference number. If we use Interactive Investor as an example, they publish their FCA number on their Disclosures page – a page only people as sad as us would care to visit.

Take that number and bang it into the FCA’s site to check yourself, and boom! – there you have it. This is a firm that has been given permission to provide regulated products and services.

Companies like Freetrade tend to be very transparent about their authorised status and protection. Freetrade have a dedicated page detailing this and even link straight to the FCA’s page:

How Much is Protected by the FSCS?

Your investments are protected up to £85,000 per eligible person, per firm. This seems like a paltry amount, but this protection works alongside other protections, so in practice the protection is much higher.

According to an article from MoneyWeek magazine, their conclusion was that if your investment account is worth twice the FSCS limit, losses would be very unlikely. And even if it was ten times the limit, the risks are probably still low. Let’s now look at why this is the case.

Client Money and Asset Rules

Investment platforms are required to separate client money and assets from their own resources.

This is a crucial piece of protection because they are not permitted to use client money and assets in operating their own business.

Your investments (including any uninvested cash) are ring-fenced and in event that the platform became insolvent – they would be unable to touch your investments or money. However, if the platform did become insolvent the appointed Administrator is entitled to claim their costs for distributing client money and assets from the client money pool.

We wouldn’t worry too much about this though as any money you lose as a result of this would be covered by the FSCS up to a limit of £85,000 per client.

From what we have seen from past broker failures (Beaufort Securities, Pritchard Stockbrokers, Fyshe Horton Finney, SVS Securities), the FSCS protection on top of pooled client money has been adequate compensation for almost all clients.

Only we are sad or crazy enough to read through a platform's FCA registration details

What About Funds and ETFs?

This subject has the potential to cause confusion, but we’ll summarise in simple terms. Most ETFs are not domiciled in the UK and tend to be in Ireland for tax purposes, but this throws a spanner in the works.

Many popular ETFs on the London Stock Exchange (such as the Vanguard FTSE 100 ETF VUKE) will be authorised in Ireland.

So, what does this mean? Firstly, it means that your collective investments domiciled outside of the UK are NOT protected by the UK protection scheme.

We did lots of research here to try and determine whether the Irish equivalent protection scheme covered Irish domiciled ETFs but could not find anything conclusive – with various sources contradicting each other.

From what we found it seems that Irish ETFs are NOT protected by the Irish equivalent of FSCS.

The saving grace is the ring fencing rules and if we quote some Vanguard documentation:

“In practice, for all UK and EU authorised funds, the underlying investments must be held separately from the fund manager by an independent trustee or depositary. With both Ireland and UK authorised funds, in the event that a fund provider defaults, the underlying investments will remain intact.”

In any case the Irish equivalent protection scheme is pretty lacklustre anyway, with the maximum protection a dismal 90% of your loss up to a max of just €20,000 per investor.

The best protection may actually be the ring fencing rules

How Can You Reduce Risks?

The larger the investment firm the safer your money should be. The firms themselves are likely to be more profitable and therefore safer.

For many of the big platforms you will be able to check them yourself as they are publicly listed companies, such as AJ Bell and Hargreaves Lansdown. You will want check their accounts, history of its key people and news about its past activities. These checks won’t be as easy for private firms.

The bigger the platform the more the FCA will monitor its activities and hopefully therefore reduce the chance of mismanagement.

As your investment pots grow into the hundreds of thousands, you might want to start purposely splitting your money across multiple platforms for added peace of mind.

This currently is a nuisance, in part because you benefit from reduced fees on larger investment pots, but we see a time in the not too distant future when platform fees are eliminated.

Should You Be Worried If You Have Less Than £85k?

The short answer is yes you should be partially concerned. You won’t lose any money as you would be compensated, but to reclaim the money from the FSCS could take many months. At time of writing they are saying it will take 7 months to reimburse claims relating to investments.

There is an opportunity cost of having your money tied up for that length of time. You may need the money to live, there might be a crash in the markets that you need to take advantage of, or you may miss out on huge growth in the markets.

At least you will be compensated for the amount lost due to broker failure. Don’t forget that this compensation is not to protect you from poor investment performance.

But on the whole, don’t worry about too much – it’s almost always better to hold investments than to not – and cash is riskier to hold in our opinion because you don’t get the ring-fencing protection that an investment gets.

The protections are there should the worst happen. Until then, keep investing with confidence.

How do you reduce investment risk associated with broker failure? Let us know in the comments section.

Oil is Low – Buy Buy Buy! | Best and Easiest Way to Invest in Oil

Oil prices have collapsed in 2020 following the outbreak of the corona pandemic, down a mega 63% since the start of the year at time of filming in April.

The West Texas Intermediate oil price has just fallen through the floor. At time of filming it was around $23 a barrel – incredibly cheap when we consider it was at $135 in 2008, its historical high. We filmed this video mid-April, and by release date it had fallen even further… into historic negative territory! Buy Buy Buy!

Below we cover why Oil prices are so low, the easy ways you can invest in Oil, and how we just invested in Oil the MoneyUnshackled way – layering in cashflow and diversification into this classic growth asset.

Editor’s note: Invest in Oil while getting a freebie – investment app Freetrade are giving a randomly chosen free share to each new customer who opens an account using the link on the Offers page – it could be worth up to £200, and all you have to do is open an account and top up by £1 – what are you waiting for?!

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Why Oil Prices Are So Low

2 things happened in early 2020 to push Oil prices to record lows – The Oil Wars, and about 2 weeks later, the coronavirus and resulting lockdowns.

The drop in demand from recession and lockdown would normally be enough to reduce oil prices, but the price was artificially lowered further by the activities of a major global player in the industry, Saudi Arabia.

The Saudis decided that they didn’t like the way Russia were looking at them at an Oil conference in March 2020, and announced that they would flood the market with cheap oil – a form of mutually assured destruction for both economies.

At time of filming, Trump had just backed an international deal to get prices back up, but the next day they’d actually gone down further!

"You lookin' at me?" The Saudis took issue with the Russian delegation

Oil as an Asset

Oil fits into the core of our investment portfolios. The core is reserved for cash flow generating assets like rental property, Global dividend-paying ETFs, and high interest Peer-to-Peer Lending, and Oil stocks are the biggest and most dependable dividend payers out there.

Oil itself is a commodity, and we also hold these in our core portfolios as they help us to Own Inflation and so Own The World.

We’ve previously mentioned that commodities like Oil and Gold might make up 5-10% of your total portfolio.

Oil, as a commodity, is a growth asset – meaning it doesn’t generate cash flows, so you invest in it because you believe the price will grow.

Whereas shares that go up and down in price still pay dividends – it’s nice to get regular cash injections from your dependable shares holdings regardless of the ups and downs of the market, but your commodities do not pay you a cash tribute.

So, by investing in oil commodities we are banking on the assumption that oil prices will go up in the future. Now let us tell you 3 easy ways to buy Oil, and which is best.

Oil sits in the Core of our portfolios

The Different Ways You Can Buy Oil

#1 – Invest in Oil Directly with an ETC

The purest way to invest in Oil – outside of actually buying a barrel and storing it in your garage – is through an ETC (Exchange Traded Commodity).

We decided this one was as good as any other: the WisdomTree WTI Crude Oil ETC (CRUD) which has an OCF of 0.54%, at the top of the fee range that we consider to be acceptable.

This Crude Oil ETC works like an ETF in that it tracks an index – the WTI Crude Oil price index in this case, and we can see that it has fallen around 63% from $9.0 to $3.6 since January 2020:

WisdomTree WTI Crude Oil ETC (CRUD)

To buy this ETC, you need to have an account on a premium investment platform, such as Interactive Investor.

The free trading platforms Freetrade and Trading 212 Invest have too small of an investment universe to offer this.

Interactive investor is the platform that Andy holds the vast majority of his portfolio in, because it is relatively cheap if you hold a large portfolio, and in our opinion is the best of the premium platforms.

There is no way to invest in Oil directly through the free platforms. But there are extremely close – and in some ways better – proxies to investing in Oil directly, which they do offer.

#2 – Buy Oil Stocks

With any good investment platform including the Freetrade app, you can invest in BP, Royal Dutch Shell, ExxonMobil, and a whole bunch of other Oil companies.

Oil companies’ share prices tend to move in the same direction as world Oil prices, though movements are not necessarily on exactly the same scale.

While crude oil prices fell 63% YTD, an index of the top oil companies (World Energy Index) fell 42% – still a huge drop. By comparison, the FTSE 100 fell only 23% over the same time period.

The reason an index of oil companies hold their value better than the oil price is because many of them are absolute goliaths in the stock market: cash-rich mega-companies.

They are accustomed to the crazy twists and turns in the oil price, and are well protected with their gargantuan cash reserves.

They are so stuffed full of cash that they find it easy to adapt to tough market conditions by cutting their investment expenditure, and have incredible dividend paying records.

That’s the beauty of investing in Oil via company proxies – companies pay dividends and can smooth out returns.

Shell has managed to deliver an uninterrupted and uncut stream of dividend pay-outs since World War II – ExxonMobil haven’t missed a dividend in 138 years.

The Oil companies won’t allow themselves to end up like the fossils that they burn

Staying Power

We expect they really are too big to fail. The Oil companies of today will be the hydrogen and fusion companies of tomorrow.

Those sandal-wearing hippies who harp on about the evils of the Oil giants fail to understand that it is these very Oil giants who are investing the most cash into new clean energy alternatives.

The Oil companies won’t allow themselves to end up like the fossils that they burn.

It won’t be Greta Thunberg who turns the world green – it will be BP, ExxonMobil, Total and Shell.

#3 – Using an ETF

This is the best way in our opinion. ETFs are diversified, low-fee, and mostly track indexes that can be easily monitored.

To invest in Oil companies, we’d invest in an ETF that tracked an index of global Oil companies.

The index that we want to track is the MSCI World Energy Index. The ETF I invested in is called the SPDR® MSCI World Energy UCITS ETF (WNRG), which has an ongoing charges fee of just 0.3%.

This ETF is listed on multiple stock exchanges, but we’ll pick one that’s traded on the LSE.

Here’s the listing of holdings within this baby:

The World Energy Index Top 10 holdings

It’s near perfect for what we’re trying to achieve, stuffed full of Oil super-giants from across the world.

In one neat little package this ETF tracks Oil as closely as it is likely possible to get by using stocks rather than tracking the oil price.

It is an accumulating fund, which means that all the dividends are collected from those legendary dividend-paying companies and reinvested into your fund’s value as they arise.

The index dividend yield at March 2020 is an incredible 8.28%! No matter the ups and downs of oil prices, you’re still getting an amazing boost to your investment off the bat, even if some companies in the index do cut their dividends during the current recession – we expect many will not.

An Oil ETC is unlikely to compete with this ETF’s growth power that comes from layer upon layer of accumulating dividend pay-outs, boosting the underlying value from the Oil assets.

To buy this ETF, you again need to use a premium platform like Interactive Investor.

An Oil ETC is unlikely to compete with this Oil ETF’s growth power

Portfolio Tip

Remember not to put all of your eggs in the Oil basket – If you’re buying ETCs, we say that commodities shouldn’t take up more than 10% of your portfolio.

If we include Oil stocks and ETFs, we wouldn’t put any more than 15% of our portfolio in Oil and prefer to diversify across sectors. 

Will you be taking advantage of Oil’s historic lows? What platform are you buying on? Talk to us in the comments section!

Written by Ben

Vanguard | Invest In Which Global Tracker Fund | Vanguard LifeStrategy vs Vanguard FTSE All-World ETF

On this site we’ve talked a lot about the importance of owning the World when you invest. But there are many ways to achieve this, and we ourselves utilise many of these methods.

We recently released a very popular video on the Stock Market Crash and briefly mentioned a Vanguard global fund I was using to capitalise on the cheap stock prices. There’s a compelling argument that the only equity fund you need is a total world equity tracker.

It seems that some of you who watched that video were interested in knowing why we had chosen The Vanguard FTSE All-World ETF (VWRL) over a Vanguard LifeStrategy fund or even over our own handmade World ETF portfolio.

This is perfectly understandable considering we often mention the LifeStrategy fund as a great way for beginners (or the uninclined) to own the World.

There are loads of global funds available to investors and even Vanguard themselves offer several, which all appear on the face of it to do the same thing.

This obviously isn’t particularly helpful when all you want to know is what you should be investing in right now. The enormous choice just clouds our judgment. Under the hood, most of these funds are very similar and any difference is minute enough to probably bear little importance in your decision making.

In this article we are going to mention what we invest in and why, explain the difference between The Vanguard FTSE All-World ETF (VWRL) and a Vanguard LifeStrategy fund, why we might invest in each and what truly matters when looking for a global tracker fund.

Editor’s note: Take advantage of the stock market crash with a boost when you open a new investment account using one of the links on the Offers page! Freebies include free shares, cash bonuses, or money off your fees.

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What We Invest In?

Let’s start this video with disclosing which global tracker funds we invest in and when, and then we’ll get to the reasons why. While our portfolios are not identical, they do follow the same design methodology.

The bulk of Andy’s SIPP is invested in The Vanguard LifeStrategy 100% Equity Fund and Ben will be soon consolidating all his pensions into a SIPP in this very same fund. So, our pension investments will be pretty much the same.

Regular followers will know that we prefer to invest the majority of our money in accessible accounts such as a Stocks and Shares ISA or general investment accounts – that means not in Pensions and Lifetime ISA’s which tie up your money until you are too old to enjoy it.

For these accessible investments we both build our own World portfolios consisting of a core of about 6 ETFs – 1 for each major region – US, UK, Europe, Japan, Asia Pacific and Emerging Markets.

Andy also invests a portion of his wealth with the Robo-investing platform Nutmeg, which itself creates its own World portfolio.

And in addition to this has recently been buying The Vanguard FTSE All-World ETF (VWRL) during the recent Stock Market panic.

So many strategies for Owning the World

Why We Invest in These?

#1 – Vanguard LifeStrategy 100% Equity Fund

First and foremost, we think the Vanguard LifeStrategy 100% equity fund, or even its Bond variations, offer excellent one-stop shops for owning the World. It does however overweight the UK with about 23% of the fund, which a normal world tracker would not do.

In fact, this is one of the things we like most about it. We are obviously UK based and an income in sterling is very important to us. Technically this home bias means the LifeStrategy funds are not really global trackers as it’s based on Vanguard’s own proprietary view.

With that said it does hold investments in all the major global markets and does it all for an extremely low cost of just 0.22%.

This makes it perfect for our pensions as we don’t want to be managing a portfolio that we cannot access for decades. Vanguard handles all the rebalancing while you get on with living life now.

This also makes it a perfect ready-made portfolio for those who can’t be bothered to manage investments but perhaps know enough to be able to assess their own risk appetite.

We aren’t financial advisors so don’t offer an advice service but will point people in the following directions:

One aspect of the LifeStrategy fund, which we feel is important, is its type – it is an Open-Ended Investment Company or OEIC, which is the most common but not necessarily our preferred fund type. That accolade goes to the Exchange-Traded Fund (ETF).

An OEIC only has 1-day pricing, so you don’t know the price you pay until when the order is executed.

We love ETFs so much because they offer live pricing; so like Stocks & Shares you know the price you pay before the order is executed. Which leads us nicely into:

#2 – The Vanguard FTSE All-World ETF (VWRL)

This ETF holds an incredible number of stocks – 3,365 at time of filming, which is a representative sample of the World’s listed companies.

Unlike the LifeStrategy fund, which in one way was actively managed by Vanguard, the FTSE All-World ETF seeks to track the performance of the FTSE All-World Index. This index includes approximately 3,900 holdings in nearly 50 countries, including both developed and emerging markets. It covers more than 95% of the global investable market capitalisation. Now that truly is a global investment!

So, why is Andy investing in this ETF over his usual self-built portfolio? Firstly, for simplicity. It’s so easy to buy and regularly monitor just one fund. He’s still continuing to invest in our own World portfolio on a monthly basis, but can more easily monitor the price of this ETF during the global crash.

We have confidence in World markets long term

We are always optimistic about the long-term future of the World economy, so it makes sense to put your money in a World investment that is market-capitalisation-weighted.

That means if Microsoft make up 2.6% of the Worlds capitalisation then 2.6% of your money is invested in Microsoft.

That also means that a very small amount of money is invested in companies that you have never heard of, which is awesome. But at such small percentages of the fund they will have practically zero impact on the fund’s performance.

You have to wonder whether that level of diversification is necessary but at least it doesn’t cost much at all. The OCF is the same as LifeStrategy at 0.22%, so cheap as chips as we would expect. 

Another reason Andy’s choosing this fund over the LifeStrategy right now is that he’s been investing quite frequently and free investments apps such as Freetrade don’t offer OEICs but they do offer ETFs including, yep you guessed it, The Vanguard FTSE All-World ETF.

This has allowed him to buy regularly without incurring trading fees, which is awesome. By the way Freetrade are giving away a free stock to new customers if they use our special link, which can be found on the Offers page. You need to use the link to qualify for the offer.

This fund also distributes income on a quarterly basis, which we love as we like to see income flowing into our pockets regularly – I mean who doesn’t?

The LifeStrategy range distributes income yearly if you buy the income share class and offers a similar yield of around 2% – probably because they hold much of the same underlying holdings.

LifeStrategy is a bit UK focused - but the UK is awesome, so is that such a bad thing?

Granular Detail

Okay so you’ll be glad to hear we’re not going deep dive into each fund in this video because most of you will switch off but for those that want to do this themselves some good resources include Vanguard’s own site. Morningstar is another fantastic site, and so is Hargreaves Lansdown. Have fun.

What Matters When Looking for A Global Tracker Fund?

3 key things:

#1 – Make sure it tracks the World – many fund providers will give a fund a misleading name, so it’s worthwhile to check the detail. Quite often they will just track the developed World and even miss out big guns such as China.

#2 – Diversification – Always check how many holdings it has. The more the better as this will represent more of the World even if the percentage in the smallest holdings become seemingly insignificant. You can’t accurately track the World if the fund doesn’t own the World.

#3 – Cost – Our viewers know that fees are vitally important. Don’t pay high fees unnecessarily and remember that the higher the fees the less well it will do at tracking the World!

Do you invest in the World and if so, how? Let us know in the comments section.

Why You Should Care About A Stock Market Crash

A stock market crash affects all of us, whether we invest or not.

Your non-investor mates in the office don’t care about the recent market crash, because they don’t educate themselves in personal finance; but we’re sure you know better.

In this article we show the ways that both investors AND investors are affected by a stock market crash – just like the one we are in right now.

Editor’s note: Take advantage of the stock market crash with a boost when you open a new investment account using one of the links on the Offers page! Freebies include free shares, cash bonuses, or money off your fees.

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“I Don’t Invest” – Of Course You Do!

Let’s touch briefly on pensions.

Almost everyone who works invests in the stock market without knowing about it via their defined contribution pension.

£600bn is held in defined contribution pensions – simplistically, if a quarter is shaved off the stock market, £150bn of our pensions just went “poof”.

However – don’t be too alarmed by this. By the time you retire the current slump will likely be forgotten.

Though worryingly, most let experts manage their pension pot for them; and experts are stupid.

Experts can’t help but fiddle, and during a financial crisis will try, but likely fail, to improve the situation.

Ideally your pension will invest in market trackers that do not require experts to manage, in which case you simply ride out the current market slump.

Be wary of pension fund managers

If You’re Over 50

People approaching retirement are in more trouble. As  you approach your agreed retirement age, pension managers  will de-risk your portfolio by selling shares and buying bonds, liquidising losses.

The “experts” will do this for you. Thanks experts.

If you are planning on buying annuities with your pension pot, the worst time to do this is during a crash.

Your pot will be a lot smaller than it could have been, and so will be the annuity income that you lock in for the future.

But if you’re not bothering with annuities and plan simply to live off your portfolio’s dividends – like we would – the stock market will eventually recover so your income will likely go up once the crash is over.

Ok that’s pensions – but that’s way off in Future Land – what about right now?

Non-Investors

Ignoring pensions then, if you “don’t invest” in the sense that you have neither a stocks portfolio, investment property, nor high interest bonds or Peer to Peer Lending, you should be deeply concerned right now that you have earned the disrespect of everyone in the investing community for continuing to NOT invest during the biggest bargain sale on the stock market in the last several years.

You’re making a conscious decision right now to stay poor; to have your wealth and your health affected by staying sat at your office desk for the next several decades; to miss out on being able to retire relatively young and make life about having fun – all by refusing to take advantage of low, low prices.

Ok, maybe it’s just that you don’t know how to get started? If that’s all it is, don’t worry! Investing has never been easier.

Mobile phone apps and the internet remove all possible excuses for not having a shares portfolio – for a full explanation of how I opened an investing account and immediately set up a balanced and diversified portfolio of thousands of shares in the global market, go put the kettle on, make a brew and settle down to watch half an hour of our World Portfolio playlist.

Investors and Non-Investors

Interest Rates

The stock market doesn’t directly affect interest rates – however, when governments and central banks see markets crashing, they also can’t help themselves but to fiddle.

Indeed, this is what we’ve just seen, with the Bank of England having just slashed interest rates from the lofty heights of 0.75% to 0.1%.

The simplest mechanism a country can use to prop up a falling market is to lower interest rates – the cost of borrowing. This tends to encourage spending by the population, which in turn boosts company profits and share prices.

Usually the stock market has fallen for a reason, like the current health scare, and the stimulus from lower interest rates is introduced to combat that reason – but governments don’t like to see their stock markets falling in any case, as it self-perpetuates panic and a country’s stock index price is seen as an indicator by us consumers as whether we should be panicking or not.

Mortgages and Savings Accounts

Falling interest rates don’t really matter anymore for savings accounts – they were so pathetically low before anyway. You weren’t getting rich from your savings account.

Anyone with a mortgage will be celebrating the stock market crash however, as the resulting slash to interest rates could save them hundreds a month.

Savings Account interest rates were so pathetic before anyway

Peer to Peer Lending

We are massive fans of Peer to Peer Lending, and have partnerships with many providers that you can check out on our website to give you cash back bonuses when you sign up.

But will these high interest investments be giving out lower interest rates now that central banks have lowered rates?

We assumed they would, but we’ve received emails from many Peer-to-Peer Lending platforms this last fortnight saying that they will not be reducing their interest rates – that it will be business as usual. I guess time will tell.

We think they’re seeing this as an opportunity to attract new customers, as the difference in return between pathetic bank savings accounts and P2P high interest investing is now more stark.

 And maybe that justifies them being still able to offer the same high rates.

Jobs

Many companies will be smashed into oblivion by a major stock market crash, as wider economic panic dries up sales to a level where they have to close down. This leads to redundancies.

Flybe was the first major company to go down this time around, and in the weeks since there have been reports of branch closures at banks and lots of mid-sized companies going tits-up.

If our employers were to tell us we had to be let go, we’d shrug it off because years ago we decided to be investors; and have built up portfolios that we can live off.

But many choose NOT to be financially free and instead choose job “security“, and sadly these people will have little protection during a jobs-cut. Hopefully their qualifications allow them to get another job quickly.

An Employee - dependant on his employer

What to Do to Protect Yourself from A Falling Stock Market

#1  If You Have A Portfolio Already

Don’t sell – investing is a long-term game, and a loss is only a loss once you crystallise it by selling. Buy more while the price is low!

#2  If You Don’t Yet Invest

Start! Buy now while prices are low, and capitalise on hysteria in the markets. Non investors are scared away from the stock market during downturns, when they should be paying the most attention.

#3  Don’t Panic About Your Pension Falling – unless you’re nearing retirement age

If you’re retiring soon, take control of your pension and make sure the “experts” aren’t selling off your wealth at just the wrong time. And be wary of annuities.

#4  Don’t Settle for Low Interest

Consider taking refuge from the stock market volatility in more stable Peer to Peer Lending platforms for high interest monthly income now.

Always remember to invest across platforms to minimise risk.

#5  F-Off Fund

Build up a F-Off fund, or “emergency fund”, so you can better cope with a job loss.

#6  Diversify Incomes

Take steps now to diversify your income streams away from just the one job, with interest, dividend or rent paying investments and side hustle home businesses, and you’ll be better prepared to deal with a crash when it happens.

How are you feeling about the stock market crash? Disaster, opportunity, or irrelevance? Tell us in the comments below!