No portfolio? But you could be more exposed than you think

Even if we don't own shares in individual companies, many of us will have cash tied up in other investments, such as unit and investment trusts and open-ended investment companies (Oeics). We may also have endowment mortgages and pensions affected by the stock market.

Even if we don't own shares in individual companies, many of us will have cash tied up in other investments, such as unit and investment trusts and open-ended investment companies (Oeics). We may also have endowment mortgages and pensions affected by the stock market.

Although there is so much uncertainty, it is important not to panic. When the situation becomes calmer, the action you should eventually take will depend on how soon you need to get your hands on your savings and on what sort of investment it is.

With-profits investments

Unlike unit trusts, with-profits bonds and endowment policies aren't immediately affected by a fall in the stock market since they have a smoothing mechanism to iron out short-term bumps. But if markets plunge over a long period, bonuses are cut or a market value adjuster (MVA) is applied. The MVA is there to protect long-term investors by stopping large outflows of money from the fund.

Royal & SunAlliance, the Co-operative Insurance Society and Legal & General all introduced MVAs at the beginning of last week, following Friends Provident, Scottish Widows and Norwich Union. Over the next few weeks, more insurance companies are expected to announce higher exit penalties for those cashing in policies in response to falling markets.

If you aren't planning to encash your policy in the near future, this shouldn't be a problem. It certainly shouldn't encourage you to do so as a panic reaction.

Pensions

Those people who are retiring now are in a difficult position because annuities – the guaranteed income for life you must purchase by the age of 75 – are so poor. It is important, therefore, to shop around rather than automatically accepting the rate your pension company offers.

Tom McPhail, head of pensions at independent financial adviser Torquil Clark, recommends putting more money into your pension if you can afford to, and advises using a cash fund rather than ploughing more into equities.

Ideally, try to defer purchasing an annuity as the market may well recover a little in the meantime.

If you are planning to retire in a couple of years' time, monitor your funds carefully and look for opportunities as equity prices recover. You can then move the value of your pension away from equity-based funds, into cash. You might even want to think about delaying retirement.

Although it might be tempting to ditch equities entirely, you should move your fund into cash in stages rather than in one go. And if you can invest more cash into the fund, you can take advantage of the tax relief and try to rebuild your pension funds in advance of retirement.

Those with longer to go until retirement – say, 10 years or more – are in a stronger position. Recent market falls should be seen as a buying opportunity because units are cheaper – but beware of investing too heavily as it is possible that equities haven't reached the bottom yet.

Mortgages

If you have an interest-only mortgage, take a good look at the investments with which you plan to pay off the capital at the end of the loan period.

If you have an endowment, you should have already received a letter from your endowment provider letting you know whether or not you might face a shortfall. For now, stick with whatever course of action you decided to take on the back of that letter.

Those with a pension or ISA-linked mortgage might not be aware that falling markets have left them exposed. If this applies to you, contact your provider and ask for an updated projection value.

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