Don’t put your money under the mattress

Extreme stock market volatility and the crisis at Northern Rock have prompted some crass comment about how to look after savings in uncertain times like these. Probably the worst is the glib recommendation, so often trotted out during a panic, that you might as well keep your money under the mattress. But the only people to benefit from financial advice like that are burglars.

Quite contrary to what pessimists might have you believe, anyone can still enjoy risk-free, tax-free returns comfortably ahead of inflation. Meanwhile, the more adventurous may seek to profit from setbacks suffered by others.

Long before the Chancellor, Alistair Darling, hurriedly announced that taxpayers would provide an unlimited underwriting facility for Northern Rock, the government had guaranteed deposits with another retail bank: National Savings & Investments. Perhaps because NS&I pays no commission to financial advisers, the advantages of its bonds and deposits for the risk-averse are often overlooked. But its solidity is a major virtue at times of anxiety and some of its offers are unique.