Money-saving expert Martin Lewis has issued a calming message to savers, advising against panic after a viewer reported a drop in their investment ISA value amid market turmoil connected to the Iran war. Speaking on ITV's This Morning, Mr Lewis addressed concerns from a viewer worried about losses on a stocks and shares ISA as global markets react to the ongoing conflict.
Market Volatility and the Iran Conflict
The war has sparked significant volatility in financial markets, driven by fears over disruptions to oil and gas supplies. This follows Iran's closure of the Strait of Hormuz, a critical maritime route for much of the region's energy exports. The uncertainty has led to fluctuations in investment values, prompting questions from savers like Helen, who shared her experience on the show.
Helen's ISA Situation
Helen detailed her savings, revealing she has £13,000 in an ISA bonus saver at Halifax with a 2.28% interest rate and just over £16,000 in an investment ISA with HSBC. Over the last three weeks, her investment ISA has decreased by more than £200, leading her to consider transferring the funds to a cash ISA to avoid further losses.
Martin Lewis's Response
Mr Lewis first critiqued the interest rate on Helen's cash ISA, pointing out that better deals are available elsewhere. He suggested moving it to a provider like Moneybox, where rates could reach 4.26%, emphasizing the importance of optimizing cash savings.
However, he strongly cautioned against making impulsive decisions based on short-term market movements. He stressed that investments should be viewed over a long-term horizon, typically five to ten years, rather than reacting to weekly fluctuations.
Long-Term Investment Perspective
Mr Lewis explained, "In general, if you're in a broad portfolio of investments over a five-year period for money you're not locking away, then investing will outperform saving. But the whole point of investing is that it goes up and down. If you track it constantly, you'll never invest, as all you'll see is it going down."
He added that for investments in diversified funds, such as UK or US trackers, short-term declines are not relevant unless immediate withdrawal is necessary. He highlighted the risks and rewards of investing, noting that while it aims for higher growth than saving, it carries the possibility of loss.
Key Takeaways for Savers
- Review Cash ISA Rates: Consider transferring to higher-interest accounts to maximize returns on savings.
- Avoid Short-Term Reactions: Do not make hasty decisions based on market volatility; focus on long-term goals.
- Understand Investment Risks: Recognize that investments fluctuate, and professional advice may be needed for specific decisions.
Mr Lewis concluded by reminding viewers that even experts can get market timing wrong, reinforcing the need for a steady, informed approach to financial planning amidst global uncertainties.
