Cash Trumps volatile stock markets for nervy savers

THE stock market may have bounced back from Donald Trump’s trade tariff shock but recent volatility is a vivid reminder of why many people choose to shun shares and stick with the perceived safety of cash.

- By Harvey Jones

Cash is king again and for older savers in particular, this makes a lot of sense. With retirement imminent or under way, they don’t have the luxury of time to ride out a market downturn. Their priority is now protecting the capital they have.

But it is not just older investors taking shelter in cash. Even younger generations, who are usually seen as more adventurous with their money, are showing signs of pulling back.

More than half of all DIY investors have increased their exposure to cash this year, rising to two thirds among younger millennials and Gen Z savers, but falling to below a third for older baby boomers, according to research from Charles Stanley Direct.

Its chief investment analyst Rob Morgan said during times of uncertainty, cash can help weather a market storm: "This holds true if we look at how Trump’s tariffs war wiped more than £4trillion off the stock market overnight."

While cash works as a temporary safe haven, it is still not the ideal place for long-term savings. "By over-relying on cash, investors may miss out on the higher returns of equities." Yet Morgan admits that for many, the comfort of knowing their money’s safe is worth the trade-off.

CAUTION

This move towards caution didn’t start with Trump’s tariffs. It is a trend that has been building since the pandemic, prompting many to rethink their financial priorities.