From uncertainty over the war in Iran to fears of an AI bubble, there's a lot to worry investors right now.
Some might be tempted to give up and add their money to the £12bn that flowed into cash Isas in April this year alone, the second highest monthly amount on record, according to the Bank of England.
But with the cash Isa allowance set to be cut, and the Bank predicting inflation will rise, there are compelling reasons not to cash out.
Instead you might be tempted by 'safe haven' investments, from gold to defensive stocks to money market funds.
Here we run through the pros and cons of these assets and ask what 'safe' means when it comes to investing
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When you invest your money, you take on some risk that you won't get back everything you put in. Even cash savings, while you won't lose what you put in, carry their own type of risk as your money can lose value over time due to inflation.
Not all investments are equally risky. If you invest in a new type of crypto, for example, there's a greater risk of your investment losing all of its value.
You might take on more risk for the prospect of higher returns, but for many, a lower risk approach will be better suited.
Investing your money in the long term (generally regarded as five years or more) across a broad range of investments won't make you immune to losses, but can reduce the risk of losing what you put in.
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What are typical 'safe' investments?
Some investments have been relied on as a buffer against challenging stock markets, but these carry their own downsides.
Gold
The price of gold surged to record highs at the beginning of this year, and can appeal to investors hoping to dodge shocks of inflation that hit stocks.
Bola Onifade, portfolio manager at investment platform J.P. Morgan Personal Investing, explains, ‘Economic fears and uncertainty can often lead to a ‘flight to safety’, meaning investors move into assets they perceive as less risky like gold which holds an intrinsic value and was previously used as a form of currency.
‘That said, gold does not always go up during periods of global volatility and crisis as we have seen recently.'
The war in Iran wound back some of the increases in the price of gold, and in March gold lost 14% of its market value.
Whether or not you believe it carries long-term intrinsic value, in the short term you should be comfortable with considerable price swings.
With reliable fixed income and steadier prices, bonds attract a more risk-averse crowd.
The risk involved in bonds varies depending on the creditworthiness of the bond's issuer. Government bonds from countries like the UK and US carry a low risk of defaulting.
Hal Cook, senior investment analyst at investment platform Hargreaves Lansdown says, ‘The ‘classic’ playbook during periods of market stress – sell shares and buy government bonds – makes the safe haven characteristic somewhat self-fulfilling.
‘If enough people sell shares and buy bonds at the same time, it improves the outcome, encouraging more people to do it again in future market wobbles.’
Though, the once-established pattern of bonds rising as stock markets fall has been shaken in recent years. Bond and share prices have both fallen together in recent months and most notably in 2022 amid massive spikes in inflation.
Some investors like to put money into shares of companies that will be needed regardless of what state the economy's in. This could be utilities like gas and water, or consumer staples selling essentials.
But, Dan Coatsworth, head of markets at investment platform AJ Bell, says, ‘It’s important to understand that none of them are guaranteed to provide full protection during a market downturn. This was illustrated by share price movements as the Middle East crisis unfolded, with none of these areas immune from the market pullback.'
Money market funds take on a small amount of risk as they buy short-term debts from governments or companies who have high credit ratings.
Investors often use them as they might use cash as they're low-risk and easily accessible.
The return is small and similar to higher-paying savings accounts, as they aim to match or slightly exceed the interest rates that banks pay to borrow overnight (Sterling Overnight Index Average, known as SONIA). This also means money market funds offer better pay-outs when interest rates are high, but you also can't fix on a higher rate.
There have been rumours cash or 'cash-like' investments such as money market funds held stocks and shares Isas will soon be subject to tax, though this remains unconfirmed.
Don't panic – Taking your money out of your investments prematurely risks losing more than if you had stayed calm and focused on the long term. Think carefully about whether an investment's downturn is likely to be permanent or just a bump in the road.
Invest in different types of assets – The more you broadly you invest your money, the less susceptible you'll be to big losses in any one specific investment. You can invest in a mix assets like shares, bonds and cash-like investments to balance out risks.
Invest in different sectors and countries – By spreading your money across different countries and sectors, you might be able to pick some gains that help balance out poor performance elsewhere. With this in mind, consider countries and sectors whose economies and pressures aren't too closely linked.
Don't forget about fees and taxes – You can ensure you're not paying more tax on your investments than you need to by making use of a stocks and shares Isa. Each provider charges different fees, the largest of which will consistently take a chunk of your returns - regardless of whether they're good or bad. We compared fees, customer service, ease of use and more when putting together our reviews of the best stocks and shares Isas.
