I’m really worried that my Stocks and Shares ISA has lost value over the past couple of months with the current market volatility. Should I move some of my investments into ISA bank savings accounts for the time being to keep what I have safe?

North Norfolk News: Phil Beck, independent financial adviser with Smith & PinchingPhil Beck, independent financial adviser with Smith & Pinching (Image: Smith & Pinching)

Phil Beck of Smith & Pinching responds:

It is very tempting to panic about your investments when you see values dropping rapidly, but please don’t take any knee-jerk decisions. While I absolutely can’t offer you any guarantees that your investments will recover, turbulent markets usually see share prices go up again after falling, so if you are able to sit tight and wait for things to improve, that’s usually your best option. What you don’t want to do at this stage is lock in your losses.

When share prices fall by more than 20pc from their peak, it is known as a bear market. When they rise by more than 20pc, it’s a bull market. Historically, bear markets are most frequently followed by bull markets, bringing relatively fast recovery.

In addition, it’s important to remember that interest rates on cash savings – despite the rises in the Bank of England Base Rate – are still well below the rate of inflation. Inflation is also on the rise, making it harder than ever to achieve inflation-beating returns. An investment portfolio with a moderate level of risk, held for five to 10 years and regularly reviewed, should give you a higher overall return than cash savings, even if the portfolio’s growth also struggles to beat inflation in the short term.

That’s not to say that you shouldn’t keep your ISA portfolio under review and perhaps make any changes that will help to protect it from further losses. I strongly recommend that you discuss your situation with an independent financial adviser to ensure that your ISA contents are suitable for you and, if appropriate, mitigate further risk without unduly compromising future recovery.

There is no denying that the current financial situation is unsettling, but my advice is to remain invested if you can. If you expect you will need to encash your investments at a specific point in the future, please discuss this with an adviser. Also, it’s important that you manage the risk level you are taking in accordance with your needs.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

For more information, please visit www.smith-pinching.co.uk