Simon Read: Don't panic about the euro crisis but do take stock of savings

If you’ve been horrified by this week’s events, volatile stock market investments may not be the place for your nest-egg

Finances have hit the news headlines again this week as the continuing euro crisis sent shock waves across stock markets and served as a sharp reminder of the tough times of the disastrous banking collapses of 2008.

With stock markets fleeing from uncertainty, the euro crisis helped the Footsie lurch to lows not seen since December. And the trend at the moment seems to be ever downwards. It means once again it’s a worrying time for investors. Should you just sit and watch your holdings shrink? Should you simply sell up and return to the market in less volatile times?

Or should you – contrarily – be bold, and buy equities on the basis that when others are selling, it’s always a good time to buy?

I don’t have the answer. I do know that buying or selling shares in a panic is seldom a good idea. On the other hand, ignoring the dangers can be foolhardy. The simple fact is that if you have investments – shares or funds – they are likely to have been hit in recent days. But I don’t believe that should mean you should panic and withdraw from the market.

If you can hold fast – at least until the current crisis calms down – you should be able to get a better idea of the long-term prospects for the market. And long-term is the timescale you should be looking at if you’re an investor.

That means taking a view over what you think may happen in the months and years ahead, not reacting to daily price movements.

It could be a good move, for instance, to move more cash into government bonds – gilts – which could benefit in the future from greater demand as institutional money seeks a more secure home.

However, saying all that, if you need the cash for a particular purpose – such as a home deposit – it may be logical to cut losses and liquidise your investment assets now.

In short, if you have been watching this week’s unfolding headlines with horror and fear, it may be that volatile stock market investments may not be the best place for your nest-egg in any event.

You should, in normal circumstances, take regular stock of your financial planning to ensure that investments are on track to achieve what you set them up to do. Using the current crisis to do a stock check is no bad thing. If needs be, contact an independent financial adviser to talk through your plans.

But ensure you take the time to make a reasoned decision, not one provoked by blind panic. Research published by Which? yesterday showed that almost two-thirds of people resorting to using a payday loan have been using the cash they’ve borrowed to pay for household bills or buying other essentials like food, nappies and petrol.

The figure reveals the true danger of these loans which – despite the claims of payday firms – are clearly not mostly used by sophisticated people happy to pay for the convenience of instant cash. Instead, the Which? research paints a distressing picture of hard-up families turning to expensive credit simply to survive.

In the process, of course, they’re risking falling into a disastrous debt spiral, where they can’t afford to repay the debt on time and are then hit by further excessive interest charges and additional fees.

A quarter of those who took loans said they had been hit with hidden charges such as high fees for reminder letters, and one in five said they were not able to pay back their loan on time. A third experienced greater financial problems as a result of taking out a payday loan, while almost half say they were hit with unexpected charges.

The figures come as no real surprise. I hear stories almost daily of rogue payday lenders turning the screws on borrowers, sending threatening letters in the knowledge that many people will simply crumble with fright and pay the extortionate charges.

So I echo the MP Yvonne Fovargue’s call this week for the Office of Fair Trading to introduce a “power to suspend” unscrupulous companies. In other words, the watchdog should be able to close down rogue firms, rather than have to go through the laborious legal process that allows dodgy lenders to continue their preying on the vulnerable for up to two years.

Yvonne believes, like me, that the way the industry is currently operating penalises vulnerable consumers. She said: “Voluntary regulation has failed miserably and now is the time for the OFT to be given the power to crack down on the irresponsible actions of an industry making huge profits on the back of vulnerable and low income borrowers.”

I couldn’t agree more.

s.read@independent.co.uk

Start your day with The Independent, sign up for daily news emails
News
Courtney Love has admitted using heroin while pregnant with Frances Bean Cobain, her daughter with Kurt Cobain
people
Sport
Murray celebrates reaching the final
tennis
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
News
i100
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search

Simon Read: Frozen in time - the expat British pensioners who deserve a better deal

I had dinner with the pensions minister Steve Webb this week. There was a wide-ranging discussion about the new pensions freedoms starting in April, and changes to the state pension. Crucially, I also got to ask Mr Webb whether he had any plans to have another look at the injustice that is frozen pensions.

Number of serially under-performing investment funds has increased by a fifth, survey reveals

The new Spot the Dog survey shows that even famous fund managers, holding billions of pounds of our money, can make mistakes

Mark Dampier: We always bring down Britain. But there's plenty in the tank

While the health of the economy is not insignificant, Mark Dampier finds it incredibly unpredictable in terms of its impact on the stock market

If you haven’t switched supplier or tariff in the last 12 months then you could almost certainly save money by doing so

There are easier ways to save hundreds on your energy bills

A new free app is aimed at the three-fifths of Brits who have never switched supplier

Worse hit are loyal customers with long-standing accounts – their loyalty is rewarded with lower interest rates than more recently-launched accounts

Savers are being let down by banks and building societies, says Financial Conduct Authority

Regulator’s investigation into the market found that around £160bn was held in easy access savings accounts that pay interest lower or equal to BoE base rate

What to do if you're facing repossession: However far you fall, you're not on your own

Helen Fisher had to become a 24-hour carer, and then she faced repossession. But going to the right places for help changed everything, writes Simon Read

Simon Read: Information is power. And it's in the wrong hands when people are cold-called by companies that know they're in debt

In debt? You're likely to be targeted by unscrupulous companies that hope to profit from your misfortune. They may try to pretend to be your friend by offering what they call "help" – but almost certainly that help will come with a cost and leave you worse off than you were before they got in touch.

Mark Dampier: So you've got pension freedom... will it end up as a cold shower?

In less than three months' time radical changes to pensions will take effect, providing investors with more freedom. Yet for those who prefer to make their own investment decisions, the choice of funds available is overwhelming. And an income drawdown account is also not particularly easy to manage.

The move marks the culmination of a long campaign by debt charities and insolvency firms and follows a call for evidence launched by the Minister last August

Bankruptcy rules to change, Business Minister announces

The minimum amount for which you can be forced into bankruptcy is being raised from £750 to £5,000

Three-quarters of parents say being unable to afford to heat their home adequately is hitting the health of their children

Family well-being and health hit by heating costs

A shock report reveals that fuel poverty is affecting desperate families – and their children

Many people have no understanding of pensions

Are you ready for pensions reforms?

Most people are too confused to know how to use their pensions for a secure income

At a rate of 7.5 per cent, the wind is blowing behind ethical investors

A new initiative has financial and ethical virtues, says Simon Read
Ticket to cry: many passengers have been penalised with exorbitant and unnecessary rises

Simon Read: Inflation is riding the slow train. So why have we been given a one-way ticket to travel on the fares express?

I struck a chord with many of you when I wrote a piece earlier this week about rising train fares. It seems there is an army of travellers who feel they've been ripped off by increased transport costs.

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Recruitment Genius: Technical Report Writer

    £25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

    MBDA UK Ltd: Indirect Procurement Category Manager

    Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

    Day In a Page

    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee
    World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

    Max Brooks honours Harlem Hellfighters

    The author talks about race, legacy and his Will Smith film option to Tim Walker
    Why the league system no longer measures up

    League system no longer measures up

    Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
    Valentine's Day cards: 5 best online card shops

    Don't leave it to the petrol station: The best online card shops for Valentine's Day

    Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
    Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

    Devil in blue Costa is a reminder of what Liverpool have lost

    The Reds are desperately missing Luis Suarez, says Ian Herbert
    Ashley Giles: 'I'll watch England – but not as a fan'

    Ashley Giles: 'I'll watch England – but not as a fan'

    Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
    Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

    Greece elections

    In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
    Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

    Holocaust Memorial Day

    Nazi victims remembered as spectre of prejudice reappears over Europe
    Fortitude and the Arctic attraction: Our fascination with the last great wilderness

    Magnetic north

    The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness