I got asked yesterday:
A quick question, which possibly doesn't have an answer: what, if anything, can ‘the little people' do to mitigate it? (Because, frankly, I don't see Westminster even trying…)
I am not, of course, permitted to provide financial advice here, and will not do so. However, I can suggest questions you might ask a financial advisor, and comment on other issues, so please understand that what I am saying is offered in that context.
There are two obvious things to do with regard to financial affairs, given that we face the risk of a financial crash.
Bank savings
The first is that if you have significant savings in a bank account, by which I mean a sum of more than £120,000, then this should be split between financial institutions because the government has only guaranteed to refund deposits with any one bank up to that amount.
When doing this, take care to ensure that you really have separated your funds between banks, because many operate under several names. For example, Lloyds Bank is also the Halifax and Marks & Spencer's Financial Services. A little research on this issue is, therefore, important.
In addition, when looking at rates on offer, this might be a moment to be a little cautious about the institution you wish to place your money with. If you have never heard of the organisation offering a good rate, then even though it might be subject to the deposit guarantee scheme, your prospects of recovery might be quicker if you deposit with a mainstream institution.
Questions for your financial advisor
Secondly, there are questions you could ask your financial advisor, if you have one. This is particularly pertinent to people who do, for example, have their own pension savings or funds managed by an advisor or broker.
In particular, you can advise them that you are now very cautious with regard to your risk appetite because you think that a crash might be coming, and you would therefore like to reorganise your savings, recognising that reduced risk appetite, knowing that you might get a lower investment return or gain as a result for the time being.
You could then ask:
- How would they recommend that your savings be reorganised at present?
- Do they have a problem with cash-based savings at this point in time?
- Do they think that you might have more of your funds in government bonds, right now, if they think doing so matches your very low current appetite for risk?
- Do they think you should have any of your savings in shares or corporate bonds at present, and if so, why? Be willing to challenge their opinion if they think you should, given that these are where the greatest risks are right now.
I stress, the decision would have to be yours, working with your advisor, but asking this sort of question at this moment does make a lot of sense.
Changing jobs
Financially, another protection I can suggest right now is that this might not be the moment to change jobs. If you have been in secure employment for some time, having the protections that supplies might be a benefit if the economy were to crash at present, but again, you may have a very good reason why you do want to move on.
Annuities
Finally, when it comes to protecting savings, if you are retired, this might be a moment to discuss taking an annuity, or a guaranteed income for the rest of your life, with your financial advisor, substituting risky savings products for a guarantee in its place. Again, I cannot offer financial advice, and will not, but this is a discussion that may be appropriate.
The rest of life
As to other aspects of life (and I recognise that there are plenty), the biggest risk arising from a potential meltdown is of panic buying.
We saw that to some extent in 2008, and we most certainly saw it in 2020. I am not suggesting buying large numbers of loo rolls. However, if you can afford it, and if you have space, and if any of the foods in question suit your diet, then increasing the number of meals that you might be able to create from what you might keep in a store cupboard is something to consider.
I am told that the average UK family has no more than three days of food in such cupboards at most times. This means that if panic were to spread, it would do so very quickly. Having the ability to survive that period of panic might be a good idea. When saying so, do remember to keep cooking oils or whatever else you might use to start the cooking process in your pans in stock. Without them, having the foodstuffs might not be very useful. And tea and coffee are essential, always.
Finally, and I am well aware that not everybody will be able to do this, if you can keep a little more cash aside, then it might be worth doing so in case there is stress on the banking system. But do be aware of the security risk, and right now, I am not sure that there is much reason for this.
In summary, a little prudence might go a long way right now.
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Based on information reading your blog and researching other sites, I decided after discussing the kind of questions you advocated today with my financial advisor to transfer all of my savings from shares to cash a few weeks ago.
I cited examples such as the AI bubble, Trumps irrational nature, US debt problems and that markets were peaking. However he seemed to downplay my concerns and I went against his advice.
I am now waiting it out knowing at least my savings will not reduce.
Watch this space!
I had a similar conversation with an IFA a couple of weeks ago. He said that he was of the opinion that the markets had not peaked yet and would then level off rather than crash. We had to agree to differ.
Still deciding what to do – his advise was do nothing. At least the funds are relatively low risk already.
I Googled…
does the government now guarantee bank deposits up to £120.000?
Answer…
Yes, as of 1 December 2025, the amount guaranteed for bank deposits in the UK has officially increased to £120,000 per eligible person, per authorised firm. This change was made to reflect inflation since the previous limit was set in 2017.
The protection is provided by the independent Financial Services Compensation Scheme (FSCS). Key details include:
• Per Person, Per Institution: The £120,000 limit applies to each individual person at each institution that has a separate banking licence. Be mindful that some different bank brands (e.g., First Direct and HSBC) might share a single licence.
• Joint Accounts: For joint accounts, each holder is protected up to £120,000, meaning a total of £240,000 can be protected in a single joint account.
• Automatic Protection: You do not need to do anything to benefit from this protection; it is applied automatically if a bank were to fail.
• Temporary High Balances: Special protection for temporary high balances (e.g., from a house sale or inheritance payout) has also increased to up to £1.4 million for a period of six months.
You can use the official FSCS protection checker tool to verify if your specific bank or building society is covered.
It was news to me.
Live and learn!
Richard, that was an excellent post!
So I contacted my Fidelity advisor and was told that Fidelity’s official stance is the federal reserve is likely to cut interest rate rates four times in 2026. She warned me that my cash holdings and money market funds would lose yield very quickly if that happens. The Fidelity rep seemed to think stocks were the better place, but respected my decision to keep the bulk of my investments in cash.
I asked my Fidelity representative: Would I be better off in money market funds or CDs since right now I want to focus on cash.
She said the best thing to do was keep my money in money market funds because they are liquid. She also thought they were very safe. She also gave me a list of Fidelity money market funds to research as some have higher yields than others.
She did not try to push me into stock investing, but I thought the conversation was interesting as she said Fidelity leadership wants all the advisors to reach out to their clients to warn them if they are holding cash yields are going to go down very quickly due to interest rate cuts they expect to come in 2026.
To which I say: If Donald Trump ends the independence of the federal reserve, I’m not so certain that treasury yields would go down when interest rates are cut. That’s not what happened to Turkey!
Anyway, Richard keep up the good work and I really like your blog!
Thanks for sharing.
At the end of the day, we have to choose, including our advisors.
Do annuities carry credit risk of the insurance company? Or are they government protected in some way?
There is a risk, I agree.
And as the FT noted, be wary of cash funds outside the government guarantee scheme.
Very well said, Richard – thank you. I would recommend, in the first place, concentrating on paying down debt and making sure that savings and investments are paying a good income stream. The moralist, Samuel Smiles, wrote in “Self-Help” in the 1860s: –
“Every man (sic) ought so to contrive as to live within his means. This practice is of the very essence of honesty. For id a man do not manage to live honestly to live within his own means, he must necessarily be living dishonestly upon the means of somebody else. Those who are careless about personal expenditure, and consider merely their own gratification, without the regard for the comfort of others, generally find out the uses of money when it is too late. Though by nature generous, these thriftless persons are often driven in the end to do very shabby things. They waste their money as they do their time; draw bills upon the future; anticipate their earnings; and are thus under the necessity of dragging after them a load of debts and obligations which seriously affect their action as free and independent men.”
Today, that means paying off your credit cards in full every months, keep at least 6 month’s regular expenditure in an instant-access savings account, and suchlike.
Things I have always tried to do, even if it means consuming less.
Thanks
Many thanks for this, Richard.
I should perhaps have been a little clearer in my question, but I hadn’t even thought of pressing you for actual financial advice.
You covered exactly the kind of areas I wanted – especially the ‘Rest of Life’ section, which is all many ‘little people’ can address. Good practical advice and I hope various charities are listening – just in case…
Thanks